| PublicationDate: 6/6/97 Summary: Postponment of Publication of Dear Colleague Letter Author: PTAS - Policy / Training / And Analysis Service TO : Student Financial Assistance Bulletin Board Service FROM: Brian Kerrigan Deputy Director Policy, Training and Analysis Service DATE : June 6, 1997 RE : Postponement of Publication of "Dear Colleague" Letter Discontinuing the Requirement to Distinguish between "Federal Perkins Loans" and "National Direct Student Loans (NDSLs)" made under the Federal Perkins Loan Program This is to inform the student financial aid community that the Department of Education (the Department) will postpone publication of a previously announced "Dear Colleague" letter that would have discontinued the requirement for schools to distinguish between "Federal Perkins Loans" and "National Direct Student Loans (NDSLs)" made under the Federal Perkins Loan Program. As originally conceived, the plan to discontinue distinguishing between loans in the Federal Perkins Loan program was intended to: - reduce the number of different promissory notes used in the program from four to two; - relieve schools of the burden of determining what "type" of borrower individual students are and tracking those students separately through the life of the loan; and - eliminate any lingering confusion resulting from the similarity in loan program names between the National DIRECT Student Loan Program and the William D. Ford Federal DIRECT Student Loan Program. As the "Dear Colleague" letter neared publication, a number of Perkins schools began to express concerns about the servicing requirements and costs related to the DCL's directive. Additionally, several organizations representing the financial aid community expressed their belief that borrowers might be confused by the change and that the current regulations governing minimum repayment might increase costs to borrowers with a combined portfolio of NDSLs and Federal Perkins Loans. After further consideration of the concerns expressed by the community about this impending DCL, the Department has decided not to publish the letter at this time. Although we still believe that this change is beneficial for the Federal Perkins Loan Program, we now believe that further regulatory change is necessary to eliminate servicing problems and costs associated with this change and to ensure that borrowers with combined portfolios retain all program benefits they currently enjoy. We are aware that advance notice of this policy change in the administration of the Federal Perkins Loan Program was announced to the community before the planned implementation date of July 1, 1997. The Department regrets any inconvenience this may have caused. Thank you for your patience in this matter. |