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Renee Bishop, CPA

Federal Perkins Loan Extended through 2017

2016-02-12

As we reported late last year, the Senate did not act to renew the Federal Perkins Loan Program prior to its expiration on September 30th. This left many wondering how colleges and universities across the country would wind down the program and calculate and return any federal share.

The Dear Colleague Letter posted in January 2015 provided some guidance (GEN-15-03), including some grandfathering for borrowers, though steps for the disposition of schools' revolving loan funds were not addressed. While clear procedures are in place for an institution’s voluntary withdrawal from the Federal Perkins Loan Program, no such guidance is yet available for an involuntary withdrawal. Learn more here.

Then, on December 18, 2015, the President signed an extension to the Federal Perkins Loan Program into law. This extends the program through 2017 and allows for additional lending to new undergraduate borrowers through September 2017, if the student has exhausted all undergraduate borrowing under the Federal Direct Loan Program.

Eligible graduate borrowers can in most cases receive additional loans under this program through September 2016. The law also provides a timeline for the repayment of the federal share of the balance of its Perkins Loan funds.

Beginning October 1, 2017, the institution must pay the department a portion of:

  1. The federal share of the balance of its Perkins Loan funds and;
  2. A portion of the loan payments (principal and interest) received by the institution

To learn more, you can read the new law here.

Need help or have additional questions?

Our experience with Perkins Loan liquidation/closeout audits can be of great help to you as you navigate the complexities of closing your Perkins Loans. Feel free to contact Renee Bishop, Emily Parker, Mark LaPrade or any of our Higher Education experts.