Must We Reimburse Our Perkins Fund For Lost Interest If We Extend the 0% Interest Benefit To Our Perkins Borrowers?

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This guidance is not award-year-specific and applies across award years.

This AskRegs Knowledgebase Q&A was updated on October 23, 2022 to reflect the Biden administration announcement, which further extends the federal student loan administrative forbearance period, the pause in interest accrual, and the suspension of collections activities for all federally held student loans.

Under the U.S. Department of Education's (ED's) latest extension, "Payments will resume 60 days after the Department is permitted to implement the [Biden Student Loan Forgiveness] program or the litigation is resolved, which will give the Supreme Court an opportunity to resolve the case during its current Term,” ED’s notice reads. “If the program has not been implemented and the litigation has not been resolved by June 30, 2023 – payments will resume 60 days after that.”

According to guidance NASFAA has received from ED, if the institution chooses to extend the zero percent (0%) interest benefit to institutionally held Federal Perkins Loans, the institution does not need to reimburse its Perkins Revolving Fund for the lost interest. The option to offer zero percent interest until the end of the payment pause is not an incentive repayment plan created by the institution under 34 CFR 674.33(f).

Both payments and interest are automatically suspended on all federally held Perkins Loans from March 13, 2020 through the end of the payment pause. The April 3, 2020 Electronic Announcement expands coverage to Federal Perkins Loans held by schools. On a voluntary basis, schools that hold Perkins Loans may choose to provide the same suspension of interest and payments to the loans they hold.

Update Notes:

AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.