ED Publishes Guidance on Perkins Extension
Last December, Congress passed the Federal Perkins Loan Program Extension Act of 2015, giving new life to the program after it expired in September. The Department of Education recently published a "Dear Colleague Letter" (GEN-16-05) providing guidance to institutions on implementing the Extension Act, which allows current and new undergraduate borrowers to receive new Perkins Loans through September 2017.
If an undergraduate receives a Perkins disbursement after June 30, 2017, and before October 1, 2017, for the 2017-18 award year, the student may receive any subsequent disbursement of that Perkins Loan.
For current undergraduate borrowers, Perkins Loans are available only after exhausting their subsidized Direct Loan eligibility. New undergraduate borrowers may receive Perkins Loans after exhausting all their Direct Loan eligibility (subsidized and unsubsidized).
Graduate students are eligible to receive a Perkins Loan through September 2016 if they received a Perkins Loan before October 1, 2015 and received their most recent Perkins Loan for enrollment in their current academic program.
In addition to the disclosures institutions already must provide, the Extension Act requires schools to share additional notices and explanations with each Perkins borrower before the first disbursement. These new disclosures include:
- A notice regarding the end to future availability of Perkins Loans.
- An explanation that repayment and forgiveness benefits available to Direct Loan borrowers are not available to Perkins borrowers.
- A notice regarding the borrower's option to consolidate a Perkins Loan into a Direct Consolidation Loan, including any benefit of consolidation.
- For current undergraduate borrowers, a notice comparing the interest rates of Perkins Loans and Direct Loans and informing the borrower if he or she has reached the maximum annual borrowing limit for subsidized Direct Loans.
- For new undergraduate borrowers, a notice comparing the interest rates of Perkins Loans and Direct Loans, and informing the borrower if he or she has reached the maximum annual borrowing limit for subsidized and unsubsidized Direct Loans.
While NACUBO has provided this summary of ED's guidance, members are strongly encouraged to read the letter in its entirety.
In the next several months, ED plans to publish additional guidance regarding the disposition of institutions' revolving Perkins funds.
Vice President, Policy and Research
Director, Student Financial Services and Educational Programs