Publication Date: November 2001
DCL ID: CB-01-13
This letter provides implementation information about the enclosed new Federal Perkins Loan and National Direct Student Loan (NDSL) promissory notes.
SUMMARY: This letter provides implementation information about the enclosed new Federal Perkins Loan and National Direct Student Loan (NDSL) promissory notes.
FEDERAL STUDENT FINANCIAL AID HANDBOOK REFERENCE: This letter supplements the information contained in Part 2 of the Campus-Based Program Section of the 2001-2002 Student Financial Aid Handbook
This letter will serve as the Department of Education's (ED) approval of the following Federal Perkins Loan and NDSL promissory notes:
· Federal Perkins Loan Closed-End Promissory Note
· Federal Perkins Loan Open-End Promissory Note
· NDSL Closed-End Promissory Note
· NDSL Open-end Promissory Note
These promissory notes reflect programmatic changes made in the Federal Perkins Loan
and NDSL programs by the Higher Education Amendments of 1998. Previously, ED had provided schools an addendum to be used with the Federal Perkins Loan and NDSL promissory notes contained in Dear Colleague Letters CB-93-9 and CB-96-8.
The major changes made to the promissory notes include:
· provisions for the implementation of the loan rehabilitation program and clarification that the 24 percent cap on collection costs that may be assessed on a rehabilitated loan does not apply if the borrower defaults again on the rehabilitated loan;
· retained grace periods for borrowers who are ordered to active duty for a period of more than 30 days;
· notification of the availability of the Department of Education's Student Loan Ombudsman;
· the expansion of borrower eligibility for volunteer service cancellations for NDSL loans;
· the addition of a new section on Discharges;
· the addition of the Privacy Act Notice, Financial Privacy Act Notice, and the Paperwork Reduction Notice;
· a correction to the cross-references to the Individuals with Disabilities Act (IDEA) to reflect statutory changes as a result of the reauthorization of IDEA in 1997;
· revisions to the Deferment section to reflect that deferment requests no longer need to be in writing and that it is no longer necessary for a borrower to request an in-school deferment; and
- revisions to the Deferment section relating to economic hardship deferments for borrowers who are in the Peace Corps or who have received an economic hardship deferment under the Federal Family Education Loan Program or the William D. Ford Federal Direct Loan Program
In addition, minor changes were made in various sections of the promissory notes to improve the text and language.
Implementation of the New Promissory Notes --
Format and Content
The newly revised promissory notes are legally valid documents with an OMB document number and expiration date. The new promissory notes are authorized for use through October 31, 2004. No changes to, deletions from, or additions to the prescribed language are permitted except that bracketed text may be deleted at the option of the institution. Of course, information (name, address, and telephone number) identifying the school may be printed in Section B, Item 6. Appropriate coding is also permitted (for example, bar coding to reflect the source, type, or other identification system for filing or processing) in this area. Additional bar coding is permitted in the side or bottom margins to meet requirements for individual processing systems. These coding identifiers may not be printed on the promissory notes in a way that would alter the general layout of the note. Schools may also print in the lower margin of the promissory note a reference to the type: for example, original, student copy, file copy.
The new Federal Perkins Loan and NDSL promissory notes are available for use immediately and must be used no later than May 1, 2002. No further use of the notes issued as part of Dear Colleague Letters CB-96-8 or CB-93-9 is permitted on or after May 1, 2002.
The enclosed documents must be printed with black ink on white paper. The typeface, point size, and general presentation of the form may not be changed from the enclosed documents approved by ED. However, a school's identifying information located in Section B, Item 6 may be printed in another color to make the school's name and address more pronounced.
The new Federal Perkins Loan and NDSL promissory notes are available in PDF and Word format on ED's Information for Financial Aid Professionals website at www.ifap.ed.gov. If you have any questions concerning the new promissory notes and their use, please contact Brian Smith or Vanessa Freeman at (202) 377-4008 or via email at firstname.lastname@example.org.
Jeffrey Baker, Director
Program Development Division
Student Financial Assistance