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(CB-95-15) The Federal Perkins Loan Program Expanded Lending Option (ELO) and an agreement to participate in the ELO.

DCLPublicationDate: 7/1/95
DCLID: CB-95-15
AwardYear:
Summary: The Federal Perkins Loan Program Expanded Lending Option (ELO) and an agreement to participate in the ELO.


CB-95-15
July 1995


SUBJECT: The Federal Perkins Loan Program Expanded
Lending Option (ELO) and an agreement to
participate in the ELO.

REFERENCE: Section 463(a)(B)(i) of the Higher Education of
1965, as amended.

Regulatory requirements are contained in
34 CFR 674.7 and 674.8(a)(3) of the Federal
Perkins Loan Program Regulations

Dear Colleague:

Congratulations! As a Federal Perkins Loan Program participant
with a low cohort default rate, your institution is eligible to
participate in the Federal Perkins Loan Program Expanded Lending
Option (ELO). An institution that participates in the ELO will be
able to make Federal Perkins Loans at higher maximum annual and
aggregate limits than a non-participating institution in exchange for
matching Federal funds at an increased rate.

The ELO is available for the 1995-96 award year for institutions of
higher education that have Federal Perkins Loan cohort default rates
of 15 percent or less. If your institution elects to participate in the
ELO, your institution must submit a special ELO participation
agreement (enclosed), and your institution will be required to match
1995-96 award year Federal Capital Contribution (FCC) on at least
a dollar-for-dollar basis. Once your institution is a participating
ELO institution, you may make loans to eligible students at higher
maximum annual and aggregate limits than is the case with non-
participating institutions. All other administrative procedures would
remain the same as for institutions not participating in the ELO.
Participation in the ELO will not result in any increase in your
institution's FCC.

If your institution elects to participate in the ELO, your institution
must submit the enclosed, special ELO participation agreement,
which must be completed and returned to the Department of
education by August 11, 1995. If your institution does not elect to
participate in the ELO, you do not need to notify the Department.


INCREASED INSTITUTIONAL CAPITAL CONTRIBUTION

If your institution elects to participate in the ELO, your institution
will be required to increase the Institutional Capital Contribution
(ICC) to at least a dollar-for-dollar match with any portion of the
1995-96 award year FCC allocation received. The procedures for
drawing down Federal funds will be no different for a participating
ELO institution than for an institution not participating in the ELO.

Even if you ultimately do not make any loans at the higher ELO
levels for the 1995-96 award year, your institution must honor its
ELO participation agreement to deposit in its Federal Perkins Loan
Program Fund an ICC at least equal to the 1995-96 award year FCC
deposited into the Fund.

In making your decision to participate in the ELO, you should
consider that, in addition to making the increased ICC match for
any initial FCC allocation you received, the increased ICC matching
rate applies to any supplemental allocation your institution may
receive for the 1995-96 award year. Your institution may waive its
rights to supplemental allocations in the 1995-96 award year to
avoid the unanticipated need for the additional ICC match by
notifying the Department in writing.

ELO LOAN LIMITS

If your institution participates in the ELO, you may make loans to
eligible Federal Perkins Loan Program borrowers at the following
maximum annual and aggregate loan limits:

Annual Limits:

$4,000 for a student who has not successfully completed a
program of undergraduate education; and

$6,000 for a graduate or professional student.

Aggregate Limits:

$8,000 for a student who has not successfully completed two
years of a program leading to a bachelor's degree;

$20,000 for a student who has successfully completed two
years of a program leading to a bachelor's degree but who
has not received the degree; and

$40,000 for a graduate or professional student.

These maximum aggregate loan amounts include all previous
amounts borrowed under the National Defense Student Loan,
National Direct Student Loan, and Federal Perkins Loan programs.


ELO PARTICIPATION AGREEMENT

Your institution must enter into an ELO participation agreement
with the Secretary annually. If your institution elects to participate
in the ELO during the 1995-96 award year, you must complete,
sign, date and return the enclosed "Institutional Agreement For
Participation In The Federal Perkins Loan Program Expanded
Lending Option (ELO)", postmarked by August 17, 1995.

Your completed, signed and dated agreement and/or any request to
waive your rights to any 1995-96 supplemental Federal Perkins
Loan Program allocations must be sent to:

Campus-Based Programs
Expanded Lending Option
Institutional Financial
Management Division

U.S. Department of Education
Room 4714, ROB-3

600 Independence Avenue
Washington, D.C. 20202-5458

If the Department of Education concurs with your institution's
eligibility to participate in the ELO, an official of the Department
will sign and date the agreement, and return the copy containing
your original signature.

For information concerning ELO Participation Agreement
submission, contact Sandra Donelson, Financial Management
Specialist, at 202-708-9751.

Sincerely,


Elizabeth M. Hicks
Deputy Assistant Secretary
for Student Financial Assistance

Enclosure

Last Modified: 06/30/1995