| DCLPublicationDate: 5/1/96 DCLID: CB-96-8 AwardYear: Summary: This letter provides information about redesigned Federal Perkins Loan and National Direct Student Loan (NDSL) promissory notes. May 1996 CB-96-8 SUMMARY: This letter provides information about redesigned Federal Perkins Loan and National Direct Student Loan (NDSL) promissory notes. FEDERAL STUDENT FINANCIAL AID HANDBOOK REFERENCE: This letter supplements the information contained in Chapter 6 of the l996-97 Federal Student Financial Aid Handbook Dear Colleague: As part of an ongoing effort to reduce regulatory burden, the Secretary of Education (the Secretary) published final regulations on December 1, 1995, (60 FR 61814) that eliminated the requirement that a student sign for each advance of a loan made under the Federal Perkins Loan Program. Effective July 1, 1996, the new regulations allow an institution to obtain the borrower's signature on the promissory note only once annually (see 34 CFR 674.16). In support of these changes, we have redesigned the promissory notes provided to schools in the 1993 "Dear Colleague" letter CB-93-9 and are issuing in this "Dear Colleague" letter new, approved promissory notes. The redesigned Federal Perkins Loan and National Direct Student Loan (NDSL) promissory notes are intended to facilitate implementation of the new, reduced signature requirements and to make the Federal Perkins Loan Program easier for schools to administer. There are no new provisions in the notes; however, we have reduced the document to one page (front and back) and have eliminated separate promissory notes based on "half-time or greater" and "less than half-time" enrollment status. We will continue to provide schools with the option of using an open-end (multi-year) or closed-end (one award year or single term) promissory note. We have designed the promissory note to incorporate the borrowerþs signature on the first page. We have made every effort to make the newly formatted promissory notes easier to use. However, we are not requiring schools to use these redesigned promissory notes; schools may continue to use the current notes as provided in "Dear Colleague" letter CB-93-9. A school may make only nonsubstantive changes to the Federal Perkins Loan and NDSL notes provided by the Secretary. A school may not change the text, the order of the provisions or add new provisions to the note. However, in recognition of the different levels Page 2 - Dear Colleague of automation and technologies used by schools and the various approaches employed by schools in administering the Federal Perkins Loan program, we have decided that schools may change the order of the items in the top boxed section of page 1 only. The boxed section must include, at a minimum, the items currently in the approved promissory notes. However, the boxed section may be adjusted to allow for preprinting of student or school information or for the addition of items such as disbursement amounts and student ID numbers. The school may not move any provisions contained on page 1 to page 2 or from page 2 to page 1. The redesigned Federal Perkins Loan and NDSL promissory notes will also be available on the Departmentþs Student Financial Assistance Bulletin Board System (BBS). If you have any questions concerning the redesigned promissory notes, please contact Susan Morgan, Federal Perkins Loan Section Chief at (202) 708-8242. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance Attachment |