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This resource is being maintained for historical purposes only and is not currently applicable.

(CB-96-08) (CB-96-08) This letter provides information about redesigned Federal Perkins Loan and National Direct Student Loan (NDSL) promissory notes.

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

Last Modified: 04/30/1996