Maintained for Historical Purposes

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

Federal Perkins Loan Program - Student Eligibility

AwardYear: 1997-1998
EnterChapterNo: 6
EnterChapterTitle: Federal Perkins Loan Program
SectionNumber: 1
SectionTitle: Student Eligibility
PageNumbers: 7-10


[[Study abroad]]
The eligibility criteria for Federal Perkins Loans are provided in 34
CFR 674.9. Of course, a student must also meet the student
eligibility criteria of the General Provisions (34 CFR 668.32). Both
undergraduate and graduate students may receive loans under the
Perkins Loan Program. To be eligible for a Perkins Loan, a student
must meet the general student eligibility requirements discussed in
Chapter 2 of this handbook and must not have borrowed the
maximum amounts listed in Section 2 of this chapter. A student who
has earned a bachelor's or first professional degree may receive a
Perkins Loan to pursue an ADDITIONAL UNDERGRADUATE
degree provided that he or she meets the eligibility requirements. A
student engaged in a program of study abroad also may be eligible
for a Perkins Loan.

[[Medical interns and residents]]
An individual who is serving in a medical internship or residency
program is not eligible for a Perkins Loan. This provision in Section
464(c)(2)(A)(i) of the Higher Education Act (HEA), as amended,
became effective January 1, 1990 and does not apply to dental
internships. A student in a dental internship may receive a Perkins
Loan.

[[Incarcerated students--34 CFR 668.32(c)(2)(i)]]
An incarcerated student is not eligible to receive a loan from any of
the U.S. Department of Education's loan programs, including the
Perkins Loan Program.

[[Exceptional financial need]]
A school must give priority to those students with exceptional
financial need as defined by the school using procedures it
establishes for that purpose. The school's selection procedures must
be in writing, uniformly applied, and kept on file at the school.
Before an undergraduate student can receive a loan, the school must
determine his or her eligibility or ineligibility for a Federal Pell
Grant; a preliminary hand calculation is acceptable after a student
has filed a Free Application for Federal Student Aid (FAFSA) with
the Central Processing System (CPS). Note that even if the hand
calculation shows the undergraduate student will be ineligible for a
Pell Grant, the student must apply for one before a Perkins Loan can
be awarded. Remember that a school may not disburse a Perkins
Loan to a student unless he or she has an "official" Expected Family
Contribution (EFC) that has been calculated by the CPS for the same
award year in which the disbursement will be made.

[[Independent and less-than-full-time students]]
A school must offer at least 5% of the dollar amount of loans made
under the Perkins Loan Program to independent students and less-
than-full-time students if the Federal Capital Contribution (FCC) for
the program is partly based on the financial need of these students
and the financial need of these students exceeds 5% of the total
financial need of all students at the school (see Chapter 5, Section 1).

[[Teacher certification programs]]
A school may award a Perkins Loan and/or a Federal Work-Study
(FWS) job to a student who is enrolled or accepted for enrollment at
least half time in an eligible teacher certification or professional
credential program. Eligibility criteria for such a program are
discussed in Chapter 5, Section 1.

ELIGIBILITY FACTORS

[[Willingness to repay]]
In selecting among eligible applicants, a school must consider
evidence of a student's willingness to repay the loan. Failure to meet
payment obligations on a previous loan is evidence that the student is
unwilling to repay other loans. (For more information, see "Default
and Student Eligibility," in Section 8 of this chapter.)

[[Loan that was written off]]
If a borrower had a previous Perkins Loan, National Direct Student
Loan (NDSL), or National Defense Student Loan (Defense Loan)
that was written off because the school was unable to collect, the
borrower may be eligible for a new loan only if he or she reaffirms
the debt. Reaffirmation is not required if the amount written off was
$25 or less. To reaffirm a debt that was written off, the borrower
must acknowledge the loan in a legally binding manner, such as by
signing a new promissory note, by signing a new repayment
agreement, or by making a payment on the loan.

[[Previous cancellation due to disability]]
If a student has obtained a cancellation of a previous Perkins Loan or
NDSL due to permanent and total disability and is applying for a
subsequent Perkins Loan or NDSL, the borrower may be eligible to
receive additional funds from the Perkins Loan Program if he or she
meets certain conditions. These conditions follow:

- the borrower's physician certifies that the borrower's condition has
improved and that he or she is able to engage in substantial gainful
activity, and

- the borrower signs a statement acknowledging that any new
Perkins Loan or NDSL cannot be canceled in the future on the
basis of any present impairment, unless the condition substantially
deteriorates to the extent that the definition of total and permanent
disability is again met.

Note that if a loan was canceled based on the borrower's permanent
and total disability, the borrower cannot subsequently be required to
repay that loan, even if the borrower's medical condition improves to
the point that he or she is no longer disabled, unless the school can
prove that the claim of disability was fraudulent--refer to the
discussion in Section 5 of this chapter.

[[Previous discharge in bankruptcy]]
As a result of the Bankruptcy Reform Act of 1994, a student may not
be denied student financial assistance from the Department's
programs, including the Perkins Loan Program, solely on the basis of
a bankruptcy determination. If a student has filed for or received a
discharge in bankruptcy, has had a student loan discharged in
bankruptcy, or has not paid a student loan that has been determined
by a court of law to be dischargeable in bankruptcy, the bankruptcy
may be considered as evidence of an adverse credit history but
cannot be the basis for denial of a future loan from the Perkins Loan
Program or other student loan programs. A student is no longer
required to establish eligibility for a new student loan by agreeing to
repay the loan discharged in bankruptcy. However, schools may
continue to consider the student's POST-bankruptcy credit history in
determining willingness to repay the loan.

LOAN AVAILABILITY

Schools must make loans reasonably available to all eligible
students, to the extent of available funds, with loans made first to
students with exceptional need. A school may not exclude a
particular category of students. As stated earlier, at least 5% of the
Perkins Loan funds a school advances to students for an award year
must be offered to independent students and less-than-full-time
students if the school's FCC for that award year is partly based on the
financial need of these students and the financial need of these
students exceeds 5% of the total financial need of all students at the
school.

[[School may set priorities]]
However, the school may set certain priorities when packaging aid.
For example, a school could first distribute Perkins Loans to full-
time third-year students whose financial need is at least $500 after
their Expected Family Contributions (EFCs), Pell Grants, and any
scholarships received have been subtracted from the cost of
attendance. Perkins Loan funds may not be used exclusively for such
a group, of course, but it is permissible to establish priorities.

[[Schools may request certain disclosures]]
In administering the Perkins Loan Program, a school must comply
with the equal credit opportunity requirements of Regulation B (12
CFR Part 202). The Department considers the Perkins Loan Program
to be a credit assistance program authorized by federal law for the
benefit of an economically disadvantaged class of persons within the
meaning of 12 CFR 202.8(a)(1). Therefore, a school may request that
a loan applicant disclose marital status, income from alimony, child
support, and spouse's income and signature.

ELIGIBILITY OF STUDENT WHO DROPS OUT

[[Late disbursement--34 CFR 668.164(g)]]
A student who drops out BEFORE receiving his or her Perkins Loan
may be eligible to receive a payment, but only under the
circumstances discussed below.

Regulations regarding late disbursement of a Perkins Loan were
removed from 34 CFR 674.16 (g), and revised regulations are now in
34 CFR 668.164(g). A school may make a late disbursement of a
Perkins Loan to an ineligible student if the student became ineligible
solely because the student is no longer enrolled at the school for the
award year. Before the student dropped out, the school must have
received a SAR or ISIR for the student with an official EFC and have
awarded the student the Perkins Loan or FSEOG. The school may
make that late disbursement only if the funds are used to pay for
educational costs that the school determines the student incurred for
the period in which the student was enrolled and eligible, and the
school must make the late disbursement no later than 90 days after
the date the student became ineligible because he or she was no
longer enrolled.

If a student drops out AFTER receiving his or her Perkins Loan, but
before the end of the payment period, the school determines the
amount of any refund and repayment as discussed in Chapter 3,
Section 4, "Refunds and Repayments."

Last Modified: 07/20/1998