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The Department of Education has released a variety of documents related to the Federal Perkins Loan program over the last few weeks, but only one addresses the program's potential end on September 30, 2015. That's  when the Higher Education Act (HEA) is scheduled to expire, unless Congress acts to extend it.  

While other HEA programs also need to be extended, Perkins is seen as more vulnerable because the current HEA anticipated its fate.. This means that extending the program, even for a year, is likely to be scored by the Congressional Budget Office as costing money. Even so, the campus-based loan program may be included in an expected one-year HEA extension to give Congress time to finish its work on reauthorization.

In the meantime, ED is required to proceed as if the Perkins Loan program will end and has added a "Perkins Loan Program Wind-down" section to its Campus-Based Processing Information page on the Information for Financial Aid Professionals (IFAP) website. The section now includes a recently added Q-and-A document that builds on the guidance provided last February for awarding Perkins Loans for the 2015-16 year. Topics addressed include the administrative cost allowance, awarding funds, and grandfathering of students. ED has not yet provided any guidance specifically on the closure of the program.

Hardship Discharges

ED also issued guidance (GEN-15-13) on how to respond to undue hardship claims made by Perkins borrowers as part of bankruptcy proceedings. Under ED rules, institutions may consent to or not oppose a borrower's claim of undue hardship by analyzing the situation using a two-step process. The first step calls for examining the veracity of the borrower's claim that repaying the loan would pose an undue hardship. The second looks at the costs of objecting to the claim. The letter explains the first step in more detail, including legal history and case law, regulatory requirements, and steps institutions should take to analyze the borrower's situation. Several examples are provided.

Forms for Review

Finally, ED has proposed revisions to the Perkins Master Promissory Note (MPN), mandatory forbearance requests, and a number of deferment forms used for the Perkins Loan program as well as the Direct and Federal Family Education Loan (FFEL) programs. Interested parties can review and comment on the forms as part of the Office of Management and Budget clearance process.

The MPN is being updated to delete some dates that are no longer applicable and to revise the section on total and permanent disability to reflect current regulations. The comment deadline is August 20.

The forbearance request form is being streamlined and ED has made it applicable to Perkins Loans as well as Direct and FFEL so borrowers with multiple loans will only have to complete one form. Comments are due August 6.

The eight deferment forms address a variety of options that are available to certain borrowers. (For three of the forms, however, loans had to be made prior to July 1, 1993 for the borrower to be eligible for the deferment.) The comment deadline is also August 6.


Liz Clark

Vice President, Policy and Research



Bryan Dickson

Director, Student Financial Services and Educational Programs


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