NAICU Washington Update

Department of Education Releases Requirements for Final Perkins Loan Disbursements

February 10, 2015

The Department of Education, in a Dear Colleague Letter, established the parameters that colleges and universities must follow to “wind-down” their Federal Perkins Loan disbursements, and defined the conditions in which schools may continue to make certain student loans.

Unless Congress acts before then, authority for institutions to issue Federal Perkins Loans to new borrowers will expire on October 1, 2015. However, if an institution makes the first disbursement of a Federal Perkins Loan to a student for the 2015-2016 award year prior to September 30, 2015, the school may make any remaining disbursements of that 2015-2016 loan after September 30, 2015.

If a student has already received a Perkins Loan for the 2014-15 award year then that student may continue to receive loans in order to complete or continue their course of study through September 30, 2020. However, the borrower must meet all of the following conditions:

  • The student received at least one Perkins Loan disbursement from the school on or before June 30, 2015.
  • The student is enrolled at the same institution where the last Perkins Loan disbursement was received.
  • The student is enrolled in the same academic program for which the student received his or her last Perkins Loan disbursement.

Additionally, certain borrowers may continue to qualify for Perkins Loan disbursements for five years beyond the 2015-16 award year under certain grandfathering provisions. In this case:

  • A Perkins Loan can be made to an otherwise eligible grandfathered student to meet all or some of the student’s unmet need only after the student has been awarded all Direct Subsidized Loan aid for which the student is eligible.

The Department also indicated that it will issue further guidance to address the disposition of schools’ revolving funds and other outstanding loan portfolios “over the course of the next several months.”

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