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 |