Federal Perkins Loan Program Wind Down?
The long and winding road has ended on 9/30/15. This was the end of a one year extension for the Federal Perkins Loan Program. According to the latest guidance received from the U. S. Department of Education (ED) (Electronic Announcement dated 10/2/15) Congress did not extend the Federal Perkins Loan Program. As a result schools can longer originate Perkins loans to new borrowers after 9/30/15. However, there are some exceptions to the rule as indicated in Dear Colleague Letter GEN-15-03.
If a school makes a first disbursement of a Perkins loan for the 2015-2016 award year prior to 10/1/15, the school can make any remaining disbursements for that 2015-2016 loan after 9/30/15.
There is also a “grandfathering” provision for 2014-2015 or earlier Perkins loans as long as all of the following conditions are met:
- One Perkins loan disbursement has to have been made to a student on or before 6/30/15.
- The student is enrolled at the same institution where the last Perkins loan disbursement was received.
- The student is enrolled in the same academic program in which the student received their last Perkins loan disbursement. ED considers it to be the same academic program if the first 4 digits of the CIP code are the same.
- This “grandfather” provision can be applied to meet unmet need only after the student has been awarded all Direct Subsidized loan aid for which the student is eligible.
Since the “grandfathering” provision only applies to 2014-2015 or earlier Perkins loans, any Perkins loans made to new borrowers from the 2015-2016 award year will not be eligible for this provision.
There is a Q & A to the Federal Perkins Loan Program wind down which can be found on IFAP at www.ifap.ed.gov at the top right corner under Hot Topics. This may answer some additional questions you may have as the Federal Perkins Loan Program comes to a close.
Stay tuned for more ED guidance on the disposition of your Perkins Loan revolving funds and outstanding loan portfolios.