GEN-Q1: On December 18, 2015, authorization for the Perkins program was extended through September 30, 2017 by the Federal Perkins Loan Extension Act of 2015. Under what circumstances may a student receive a Perkins Loan?
As explained in Dear Colleague Letter GEN-16-05, the Extension Act eliminated the Perkins Loan grandfathering provisions that were previously announced in Dear Colleague Letter GEN-15-03 and provided the new eligibility requirements. The new eligibility requirements for undergraduate and graduate students are detailed in the Authority to Make Loans section of the Dear Colleague Letter GEN-16-05. [May 2, 2016]
AWD-Q1: Can an institution award Perkins Loans on or after December 18, 2015 for the 2015-2016 award year and/or for the 2016-2017 award year?
Yes. An institution may award Perkins Loans on or after December 18, 2015 for both the 2015-2016 and 2016-2017 award years as long as the student meets the Perkins Loan eligibility requirements provided in Dear Colleague Letter GEN-16-05. Those requirements include but are not limited to the following:
-
Undergraduate Students - An institution may award a Perkins Loan to an otherwise eligible undergraduate student through September 30, 2017 (2015-2016 and 2016-2017 award years).
-
Graduate Students - An institution may award a Perkins Loan through September 30, 2016 only to a graduate student who has received a Perkins Loan from that institution as a graduate student before October 1, 2015 to enable the graduate student to continue or complete the academic program in which they received their most recent Perkins loan. [May 2, 2016]
AWD-Q2: May an undergraduate student who receives a disbursement of a Perkins Loan before October 1, 2017 for the 2017-2018 award year, receive any remaining disbursements of that 2017-2018 award year loan?
Yes. An undergraduate student, who receives a disbursement of a Perkins Loan before October 1, 2017 for the 2017-2018 award year, may receive any remaining disbursements of that 2017-2018 award year loan. [May 2, 2016]
AWD-Q3: May a graduate student who receives a disbursement of a Perkins Loan before October 1, 2016 for the 2016-2017 award year, receive any remaining disbursements of that 2016-2017 award year loan?
Yes. A graduate student who receives a disbursement of a Perkins Loan before October 1, 2016 for the 2016-2017 award year, may receive any remaining disbursements of that 2016-2017 award year loan. [May 2, 2016]
AWD-Q4: If a school awarded a Perkins Loan to an undergraduate borrower for the 2017-2018 academic year and made at least one disbursement of that loan prior to October 1, 2017, and the borrower then enrolls in a summer 2018 session, may the borrower receive a Perkins Loan for the summer session?
Yes, only if the institution includes the portion of the loan that will be disbursed for the summer, 2018 session as part of the 2017-2018 award year loan for which the borrower received at least one disbursement before October 1, 2017. The institution does this by increasing the loan amount and extending the loan’s loan period. [May 2, 2016]
AWD-Q5: In Dear Colleague Letter Gen-16-05, there is a reference to current undergraduate students and new undergraduate students. How does the Department define current undergraduate student and new undergraduate student?
For purposes of determining Perkins Loan eligibility, a current undergraduate student is a student, who, on the date of disbursement of a new Perkins Loan, is a current Perkins Loan borrower who has an outstanding balance on a Perkins Loan made by that school.
For purposes of determining Perkins Loan eligibility, a new undergraduate student is a student, who, on the date of disbursement of a new Perkins Loan, is a new Perkins Loan borrower that does not have an outstanding balance on a Perkins Loan made by that school. [May 2, 2016]
AWD-Q6: If the student has an outstanding balance on a Perkins Loan made by another school, does that affect whether the student qualifies as a “current undergraduate student” or a “new undergraduate student”?
No. For purposes of awarding Perkins Loans to undergraduate students, an outstanding balance on a Perkins Loan awarded by another school does not affect whether the borrower is considered a “current undergraduate student” or a “new undergraduate student” at your school. [May 2, 2016]
AWD-Q7: For an eligible current undergraduate student, Perkins Loan funds can be awarded only after the student has been awarded all Direct Subsidized Loan funds for which the student is eligible. Can a student decline or reduce an “awarded” Direct Subsidized Loan and still receive a Perkins Loan?
Yes. A student who was awarded a Direct Subsidized Loan can decline the Direct Subsidized Loan or reduce the amount of that loan, as long as the amount of the awarded Direct Subsidized Loan is included in the calculation of the student’s Perkins Loan award. [May 2, 2016]
AWD-Q8: For an eligible new undergraduate student, Perkins Loan funds can be awarded only after the student has been awarded all Direct Subsidized and Direct Unsubsidized Loan funds for which the student is eligible. Can a student decline or reduce an “awarded” Direct Subsidized Loan or Direct Unsubsidized Loan and still receive a Perkins Loan?
A student who was awarded a Direct Subsidized Loan and a Direct Unsubsidized Loan can decline or reduce those loan amounts, as long as the amounts of the awarded Direct Subsidized Loan and the Direct Unsubsidized Loan are included in the calculation of the student’s Perkins Loan amount. [May 2, 2016]
AWD-Q9: If a student has reached his or her annual or aggregate Direct Subsidized or Unsubsidized Loan limits, is this student eligible to receive a new Perkins Loan?
Yes. An otherwise eligible student who has reached his or her annual or aggregate Direct Subsidized and Direct Unsubsidized loan limits would be eligible to receive a new Perkins Loan because the student has received the maximum Direct Subsidized and/or Direct Unsubsidized Loans for which the student is eligible. This applies for any other reason why the student is not eligible for some or all of Direct Loans (e.g., exceeded 150% Direct Subsidized Loan Limit). [May 2, 2016]
AWD-Q10: May an institution choose not to award Perkins Loans for the 2016-2017 award year to eligible students?
Yes. Longstanding guidance for the Perkins Loan Program provides that institutions may establish in their packaging policies priority groups for the awarding of Perkins Loans. [May 2, 2016]
AWD-Q11: Is an institution permitted to set the packaging order for Title IV aid? For example, may an institution develop a packaging policy that would award a current undergraduate student the full amount of the student’s eligibility for, not only for a Direct Subsidized Loan but also for a Direct Unsubsidized Direct Loan, before awarding the student a Perkins Loan?
Yes. An institution is allowed to establish its own packaging policy, as long as that policy is consistently applied and within the parameters established by the Perkins Loan Extension Act, as described in DCL GEN-16-05. [May 2, 2016]
AWD-Q12: If a student has been awarded the maximum eligibility for Direct Loans and a Perkins Loan and then subsequently becomes overawarded, which loan should be adjusted first to eliminate the overaward?
The institution can choose to either adjust the Perkins Loan or adjust the Direct Subsidized or Direct Unsubsidized Loans to the maximum revised eligibility to resolve the overaward. This assumes that the institution has taken all steps to resolve the overaward before reducing loans, including replacing all or a portion of expected family contribution (EFC) with Direct Unsubsidized Loan, as explained in Q&A AWD-13. [May 2, 2016]
AWD-Q13: When determining a borrower’s Perkins Loan eligibility, must an institution determine the maximum amount of the Direct Loan(s) before considering whether to replace all or a portion of expected family contribution (EFC) with a Direct Unsubsidized Loan, and count only the portion of the Direct Unsubsidized Loan that is not used to replace EFC against the student’s unmet need for the Federal Perkins Loan?
Yes, if the institution chooses to use some of the Direct Unsubsidized Loan as a replacement for the student’s EFC. Since the requirement is that the institution award the student his or her maximum Direct Loan eligibility prior to awarding the student a Perkins Loan, when determining the student’s maximum Direct Loan eligibility the institution may count only the portion of the Direct Unsubsidized Loan that is not used to replace EFC against the student’s unmet need for the Federal Perkins Loan. [May 2, 2016]
AWD-Q14: The Dear Colleague Letter GEN-16-05 defines a current Perkins Loan undergraduate borrower as a borrower who has an outstanding balance on a Perkins Loan made by the institution. If a student received his or her first Perkins Loan as a new borrower, would the borrower then be considered a current borrower in subsequent award years or when the institution awards a new Perkins Loan?
Yes. Once the undergraduate borrower has received his or her first Perkins Loan at an institution and continues to have a balance on his or her Perkins Loan, the borrower would be considered a current student for the purposes of awarding additional Perkins Loans. For example, an undergraduate student (with no outstanding balance) was awarded a Perkins Loan for the 2015-2016 award year as a new Perkins Loan borrower. The student returns in the fall of 2016 and is awarded a Perkins Loan as a current Perkins Loan borrower. The borrower would also be considered a current borrower if the borrower received a new Perkins Loan in the summer of 2016 and continued to have an outstanding balance on his or her Perkins Loan made by that institution. [June 1, 2016]
AWD-Q15: In determining a student’s eligibility for a Perkins Loan, should an institution include the additional Direct Unsubsidized Loan funds for which the student is eligible when the parent has been denied a PLUS Loan?
Yes. As indicated in Dear College Letter GEN-16-05, a new undergraduate Perkins Loan borrower must be awarded the maximum amount of Direct Unsubsidized Loan funds for which the student is eligible. This student’s eligibility would include the additional Direct Unsubsidized funds that are received as a result of a parent’s denial of a PLUS Loan. [June 1, 2016]
AWD-Q16: If after awarding a Perkins Loan a student advances a grade level thus becoming eligible for additional Direct Loan funds (subsidized and/or unsubsidized) must the institution use the increased amount of eligibility when determining the amount of Perkins Loan the borrower is eligible to receive?
Yes. The annual maximum Direct Subsidized and Direct Unsubsidized Loan eligibility for which the student is eligible must be considered in determining the student’s eligibility for a Perkins Loan as long as all other eligibility criteria have been met. In some instances, the institution may be required to reduce a Perkins Loan that has already been disbursed because the subsidized and/or unsubsidized loan eligibility has increased. [June 1, 2016]
AWD-Q17: If a student’s Perkins Loan has fully disbursed and then there is a denial of a PLUS loan for the student’s parent, is the institution required to re-evaluate the student’s eligibility for the Perkins Loan because of the additional unsubsidized loan funds for which the student may be eligible?
Yes. The institution must re-evaluate the student’s eligibility for the Perkins Loan even if all or part of it had been disbursed. The annual maximum Direct Subsidized and Direct Unsubsidized Loan eligibility for which the student is eligible, including the amount of the additional unsubsidized loan due to the PLUS loan denial, must be considered by the institution when determining the student’s eligibility for a Perkins Loan. Thus, the institution may need to reduce or cancel the Perkins Loan, including any amounts that had already been disbursed because the student’s Direct Loan eligibility has increased. [June 1, 2016]
AWD-Q18: If a student who has received Perkins Loans as an undergraduate at an institution then enrolls in a graduate program at the same institution and in the same major, is the student eligible to receive a new Perkins Loan as a graduate student?
No. A graduate student can receive a new Perkins loan only if the student received a Perkins Loan from the institution as a graduate student before October 1, 2015 and if the student is continuing or completing the same academic program for which the most recent Perkins Loan was received. In this case, the student’s graduate program is, by definition, a different program than the student’s undergraduate program. [June 1, 2016]
AWD-Q19: AWD Q&A number 4 states that an undergraduate borrower may receive a Perkins Loan for summer 2018 session if the borrower was awarded a Perkins Loan for the 2017-2018 academic year and if at least one disbursement of that loan was made prior to October 1, 2017. Is an institution permitted to make a disbursement after June 30, 2018 for a cross-over summer period?
No. An institution is not permitted to make a Perkins Loan disbursement after June 30, 2018 for a prior year’s crossover summer term. [October 17, 2016]
ASN-Q1: Will the Department return to the institution any share of collections on a Perkins Loan that was assigned to the Department by the institution?
No. Consistent with longstanding policy, institutions relinquish all their rights and share in any Perkins Loan that is assigned to the Department. Therefore, none of the funds collected by the Department on an accepted assignment will be returned to the institution that assigned the loan to the Department. [May 2, 2016]
RVL-Q1: In Dear Colleague Letter GEN-15-19, published September 29, 2015, the Department reminded institutions about the requirement to return to the Department of Education the Federal portion of any Excess Liquid Capital in their Perkins Loan Revolving Fund. Is the request for institutions to return the Federal Share of the Excess Liquid Capital directly related to the wind-down of the Perkins Loan Program?
No. This statutory requirement for institutions to return ELC is not related to the wind-down of the Perkins Loan program. Section 466(c) of the Higher Education Act requires institutions to return to the Department the Federal share of any Excess Liquid Capital in the institution’s Federal Perkins Loan Revolving Fund. Institutions are required to return the Federal share of the Excess Liquid Capital every year. [May 2, 2016]
RVL-Q2: In the Perkins Loan Extension Act of 2015, institutions are required to return the Federal share of their Perkins Loan Revolving Fund after September 30, 2017. How will the Department inform institutions of the process that will be used for the return of these funds?
The Department will be providing details about the return of the Federal share of institutions’ Perkins Loan Revolving Funds at a later time. [May 2, 2016]
OTH-Q1: In Dear Colleague Letter GEN-15-21, the Department published a new Perkins Loan Master Promissory Note that has an expiration date of September 30, 2018. The Perkins Loan Extension Act of 2015 extends the Perkins Loan program through September 30, 2017, and requires additional disclosures. Will the Department be issuing a revised Master Promissory Note that includes the required new disclosures?
No. The disclosures do not affect the terms and conditions of a Perkins Loan, so the Department is not revising the Master Promissory Note to include the required new disclosure statements. It is the institution’s responsibility to provide the disclosures prior to the first disbursement of each Perkins Loan. [May 2, 2016]
OTH-Q2: The Perkins Loan Extension Act of 2015 required additional disclosures to each Perkins Loan borrower before it makes a first disbursement of a Perkins Loan. Is the Department planning on releasing a template or suggested verbiage for these new disclosures?
No. The Department has no plans to provide a template or to develop model language for the new required disclosures. [May 2, 2016]
OTH-Q3: Are institutions required to provide the new disclosure statements required by the Perkins Loan Extension Act of 2015 prior to every disbursement?
No. Institutions are not required to provide the new disclosure statements prior to every disbursement. Institutions must provide all of the disclosures required in the regulations at 34 CFR 674.16 and all of the new disclosures required by the Perkins Loan Extension Act of 2015 before the institution makes the first disbursement of each Perkins Loan. For example, an institution that provides the disclosure statements to the student at the beginning of the award year, prior to the first disbursement of the Perkins Loan, would not be required to provide the disclosure statements upon each subsequent disbursement of that Perkins Loan. [May 2, 2016]
OTH-Q4: Does the Perkins Loan Extension Act of 2015 allow for the one-year General Education Provisions Act (GEPA) extension of the authority to make new Perkins Loan as was allowed under the earlier wind-down of the program?
No. The Federal Perkins Loan Extension Act of 2015 prohibits any further automatic extensions of the Perkins Loan Program under section 422(a) of GEPA.[May 2, 2016]
OTH-Q5: The amount of Administrative Cost Allowance (ACA) funds that is used by some institutions to support the servicing of their Perkins Loan portfolio will gradually be reduced as the amount of Perkins Loans awarded by the institution is reduced. Will institutions still be allowed to use ACA funds generated from the other two campus-based programs (FWS and FSEOG) to pay for the servicing of Perkins Loans?
Yes. Institutions will continue to be able to use the ACA funds generated from any of their campus-based expenditures to pay for the servicing of Perkins Loans. [May 2, 2016]