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Postponment of Publication of Dear Colleague Letter

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.

Last Modified: 08/16/1999