On January 30, 2015, the U S. Department of Education (DOE) issued Dear Colleague Letter GEN-15-03 which addressed the wind-down of the Federal Perkins Loan Program. As a reminder, the Perkins Loan Program is set to sunset (expire) on September 30, 2015, barring any change made by Congress separately or as part of the Higher Education Reauthorization Act renewal.
The Dear Colleague Letter provided guidance on continuing to make loans on a limited basis after September 30, 2015, as follows:
- If prior to October 1, 2015, an institution makes the first disbursement of a Federal Perkins Loan to a student for the 2015-2016 year, the institution may make any remaining disbursements of that 2015-2016 loan after September 30, 2015.
- There is also a narrow “grandfathering” provision that allows institutions to make Federal Perkins Loans to certain students for up to five additional years (through September 30, 2020) to enable students who received loans for award years that ended prior to October 1, 2015 “to continue or complete courses of study.” Therefore, for an institution to provide a student a Federal Perkins Loan award after September 30, 2015, all of the following conditions must be present:
- The institution must have made a Federal Perkins Loan disbursement to the student on or after June 30, 2015.
- 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 for which the student received his or her last Perkins Loan disbursement.
- Finally, a Perkins Loan can only be awarded to an eligible grandfathered student only after the student has been awarded all Direct Subsidized Loan aid for which the student is eligible.
In addition, the grandfathering provisions are not available to students who received their first Perkins Loan in award year 2015-2016.
The Dear Colleague Letter ends with notification that further guidance regarding the disposition of the institutions’ Perkins Loan revolving funds and outstanding loan portfolios will be addressed over the next several months.
We encourage institutions to read the guidance closely and consider the further issuance of Federal Perkins Loans as part of any financial aid packaging for the 2015-2016 award year. We also recommend reviewing the replacement aid packaging as part of the institution’s overall aid and budget for the 2015-2016 academic year.
The Dear Colleague Letter can be found by clicking here >>