| AwardYear: 1998-1999 EnterChapterNo: 6 EnterChapterTitle: Federal Perkins Loan Program SectionNumber: 1 SectionTitle: Student Eligibility PageNumbers: 5-8 [[Study abroad]] The eligibility criteria for Federal Perkins Loans are provided in 34 CFR 674.9. Of course, a student must also meet the student eligibility criteria of the General Provisions (34 CFR 668.32). Both undergraduate and graduate students may receive loans under the Perkins Loan Program. To be eligible for a Perkins Loan, a student must meet the general student eligibility requirements discussed in Chapter 2 of this handbook and must not have borrowed the maximum amounts listed in Section 2 of this chapter. A student who has earned a bachelor's or first professional degree may receive a Perkins Loan to pursue an additional undergraduate degree provided that he or she meets the eligibility requirements. A student engaged in a program of study abroad also may be eligible for a Perkins Loan. [[Medical interns and residents]] An individual who is serving in a medical internship or residency program is not eligible for a Perkins Loan. This provision in Section 464(c)(2)(A)(i) of the Higher Education Act (HEA), as amended, became effective January 1, 1990 and does not apply to dental internships. A student in a dental internship may receive a Perkins Loan. [[Incarcerated students--34 CFR 668.32(c)(2)(i)]] An incarcerated student is not eligible to receive a loan from any of the U.S. Department of Education's loan programs, including the Perkins Loan Program. [[Exceptional financial need]] A school must give priority to those students with exceptional financial need as defined by the school using procedures it establishes for that purpose. The school's selection procedures must be in writing, uniformly applied, and kept on file at the school. Before an undergraduate student can receive a loan, the school must determine his or her eligibility or ineligibility for a Federal Pell Grant; a preliminary hand calculation is acceptable after a student has filed a Free Application for Federal Student Aid (FAFSA) with the Central Processing System (CPS). Note that even if the hand calculation shows the undergraduate student will be ineligible for a Pell Grant, the student must apply for one before a Perkins Loan can be awarded. Remember that a school may not disburse a Perkins Loan to a student unless he or she has an "official" Expected Family Contribution (EFC) that has been calculated by the CPS for the same award year in which the disbursement will be made. [[Independent and less-than-full-time students]] A school must offer at least 5% of the dollar amount of loans made under the Perkins Loan Program to independent students and less- than-full-time students if the Federal Capital Contribution (FCC) for the program is partly based on the financial need of these students and the financial need of these students exceeds 5% of the total financial need of all students at the school (see Chapter 5, Section 1). [[Teacher certification programs]] A school may award a Perkins Loan and/or a Federal Work-Study (FWS) job to a student who is enrolled or accepted for enrollment at least half time in an eligible teacher certification or professional credential program. Eligibility criteria for such a program are discussed in Chapter 5, Section 1. ELIGIBILITY FACTORS ---------------------- [[Willingness to repay]] In selecting among eligible applicants, a school must consider evidence of a student's willingness to repay the loan. Failure to meet payment obligations on a previous loan is evidence that the student is unwilling to repay other loans. (For more information, see "Default and Student Eligibility," in Section 8 of this chapter.) [[Loan that was written off]] If a borrower had a previous Perkins Loan, National Direct Student Loan (NDSL), or National Defense Student Loan (Defense Loan) that was written off because the school was unable to collect, the borrower may be eligible for a new loan only if he or she reaffirms the debt. Reaffirmation is not required if the amount written off was $25 or less. To reaffirm a debt that was written off, the borrower must acknowledge the loan in a legally binding manner, such as by signing a new promissory note, by signing a new repayment agreement, or by making a payment on the loan. [[Previous cancellation due to disability]] If a student has obtained a cancellation of a previous Perkins Loan or NDSL due to permanent and total disability and is applying for a subsequent Perkins Loan or NDSL, the borrower may be eligible to receive additional funds from the Perkins Loan Program if he or she meets certain conditions. These conditions follow: - the borrower's physician certifies that the borrower's condition has improved and that he or she is able to engage in substantial gainful activity, and - the borrower signs a statement acknowledging that any new Perkins Loan or NDSL cannot be canceled in the future on the basis of any present impairment, unless the condition substantially deteriorates to the extent that the definition of total and permanent disability is again met. Note that if a loan was canceled based on the borrower's permanent and total disability, the borrower cannot subsequently be required to repay that loan, even if the borrower's medical condition improves to the point that he or she is no longer disabled, unless the school can prove that the claim of disability was fraudulent--refer to the discussion in Section 5 of this chapter. [[Previous discharge in bankruptcy]] As a result of the Bankruptcy Reform Act of 1994, a student may not be denied student financial assistance from the Department's programs, including the Perkins Loan Program, solely on the basis of a bankruptcy determination. If a student has filed for or received a discharge in bankruptcy, has had a student loan discharged in bankruptcy, or has not paid a student loan that has been determined by a court of law to be dischargeable in bankruptcy, the bankruptcy may be considered as evidence of an adverse credit history but cannot be the basis for denial of a future loan from the Perkins Loan Program or other student loan programs. A student is no longer required to establish eligibility for a new student loan by agreeing to repay the loan discharged in bankruptcy. However, schools may continue to consider the student's post-bankruptcy credit history in determining willingness to repay the loan. LOAN AVAILABILITY -------------------- A school must make loans reasonably available to all eligible students, to the extent of available funds, with loans made first to students with exceptional need. A school may not exclude a particular category of students. A school must offer to independent students and less-than-full-time students at least 5% of the Perkins Loan funds it advances to students for an award year if the school's FCC for that award year is partly based on the financial need of these students and the financial need of these students exceeds 5% of the total financial need of all the school's students. [[Schools may set priorities]] However, the school may set certain priorities when packaging aid. For example, a school could first distribute Perkins Loans to full- time third-year students whose financial need is at least $500 after their EFCs, Pell Grants, and any scholarships received have been subtracted from the cost of attendance. Perkins Loan funds may not be used exclusively for such a group, of course, but it is permissible to establish priorities. [[Schools may request certain disclosures]] In administering the Perkins Loan Program, a school must comply with the equal credit opportunity requirements of Regulation B (12 CFR Part 202). The Department considers the Perkins Loan Program to be a credit assistance program authorized by federal law for the benefit of an economically disadvantaged class of persons within the meaning of 12 CFR 202.8(a)(1). Therefore, a school may request that a loan applicant disclose marital status, income from alimony, child support, and spouse's income and signature. ELIGIBILITY OF STUDENT WHO DROPS OUT ----------------------------------------- A student who drops out before receiving his or her Perkins Loan may be eligible to receive a payment, but only under the circumstances discussed below. [[Late disbursement--34 CFR 668.164(g)]] A school may make a late disbursement of a Perkins Loan to an ineligible student if the student became ineligible solely because the student is no longer enrolled at the school for the award year. Before the student dropped out, the school must have received a Student Aid Report (SAR) or Institutional Student Information Record (ISIR) for the student with an official EFC and have awarded the student the Perkins Loan or FSEOG. The school may make that late disbursement only if the funds are used to pay for educational costs that the school determines the student incurred for the period in which the student was enrolled and eligible, and the school must make the late disbursement no later than 90 days after the date the student became ineligible because he or she was no longer enrolled. If a student drops out after receiving his or her Perkins Loan, but before the end of the payment period, the school determines the amount of any refund and repayment as discussed in Chapter 3, Section 4, "Refunds and Repayments." |