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The regulations for the Perkins Loan Program have been amended. The changes are effective July 1, 2000, although, some of the changes may be implemented on or after October 28, 1999. The full text of the changes are available in the Federal Register (Volume 64, Number 208). Below is the summary of changes.

SUMMARY: The Secretary amends the Federal Perkins Loan Program regulations. The regulations implement changes to the Higher Education Act of 1965, as amended (HEA), resulting from the Higher Education Amendments of 1998 (1998 Amendments). These final regulations reflect the provisions of the 1998 Amendments that affect the institutions that participate in, and borrowers who have loans made under, the Federal Perkins Loan Program. These final regulations expand borrower benefits under the Federal Perkins Loan program by increasing loan limits, expanding borrower eligibility for deferments and cancellations, establishing a loan rehabilitation program for borrowers in default on their Federal Perkins Loans, establishing an incentive repayment program, and providing a closed school discharge.

DATES: Effective Date: These regulations are effective July 1, 2000. Implementation Date: The Secretary has determined, in accordance with section 482(c)(2)(A) of the HEA, that institutions that participate in the Federal Perkins Loan Program may, at their discretion, choose to implement the provisions of Secs. 674.2, 674.5(c), 674.9, 674.16, 674.33(f), 674.41, 674.42, and 674.45 in these final regulations, on or after October 28, 1999. For further information see ``Implementation Date of These Regulations'' under the SUPPLEMENTARY INFORMATION: Section of this preamble.

SUPPLEMENTARY INFORMATION: These regulations implement the Higher Education Amendments of 1998 (Pub. L. 105-244), enacted October 7, 1998.
      On July 29, 1999, the Secretary published a notice of proposed rulemaking (NPRM) for the Federal Perkins Loan Program regulations in the Federal Register (64 FR 41231). In the preamble to the NPRM, the Secretary discussed the following major proposed changes:
      Amending Sec. 674.2 to add a definition of the term ``satisfactory repayment arrangements'' (page 41233).
      Amending Sec. 674.5 to establish, effective with award year 2000- 2001, a default penalty of zero Federal Capital Contribution for institutions with a cohort default rate of 25 percent or higher and a new default penalty that terminates the eligibility of an institution to participate in the Federal Perkins Loan Program if the institution has a cohort default rate of 50 percent or higher for the three most recent years for which data are available. The Secretary also discussed amending Sec. 674.5 to allow an institution to exclude certain loans from its cohort default rate calculation (pages 41233-41234).
      Removing and reserving Sec. 674.7 in accordance with the elimination of the Expanded Lending Option.
      Amending Sec. 674.9 to authorize the use of the same criteria that remove a borrower from an institution's cohort default rate to re- establish a borrower's eligibility for additional Federal Perkins Loans (pages 41234-41235).
      Amending Sec. 674.12 to increase annual maximum loan amounts and increase the aggregate maximum loan amounts allowable for an eligible student to levels formerly authorized under the Expanded Lending Option (page 41235).
      Amending Secs. 674.16, 674.31, and 674.45 to update and clarify credit bureau reporting requirements with which an institution must comply (page 41235 and page 41238).
      Amending Sec. 674.31 to exclude from a borrower's initial grace period any period, not to exceed three years, during which a borrower who is a member of an Armed Forces reserve component is called or ordered to active duty (page 41235).
      Amending Sec. 674.33 to authorize institutions to establish an incentive repayment program to reduce defaults and replenish their Federal Perkins Loan revolving fund. Also amending Sec. 674.33 to establish a closed school discharge for Federal Perkins Loan borrowers who are unable to complete their programs of study due to an institution's closure (pages 41235-41236).
      Amending Sec. 674.34 to extend the deferment benefits in this section to all borrowers regardless of the terms of the borrower's promissory note or when the loan was made (page 41236).
      Amending Sec. 674.39 to require institutions to establish a loan rehabilitation program for all defaulted Federal Perkins Loan borrowers (pages 41236-41237).
      Amending Secs. 674.41, 674.42 and 674.45 to require that institutions participating in the Federal Perkins Loan Program provide borrowers with information on the availability of the Student Loan Ombudsman's office (pages 41237-41238).
      Amending Sec. 674.42 to facilitate the use of electronic means in providing personalized exit counseling and make exit counseling requirements in the Federal Perkins Loan Program consistent with those in the Federal Direct Loan and the Federal Family Education Loan Programs (pages 41237-41238).
      Amending Sec. 674.47 to authorize an institution, until July 1, 2002, to charge its revolving fund for any collection costs assessed on a rehabilitated loan that are in excess of the 24 percent maximum limit that may be passed along to the borrower (page 41238).
      Amending Sec. 674.49 to reflect changes made to section 523(a)(8) of the Bankruptcy Code that eliminate a borrower's ability to have a student loan discharged on the ground that the loan has been in repayment for seven years or more (page 41238).
      Amending Secs. 674.53, 674.56, 674.57, 674.58, and 674.60 to extend the cancellation benefits authorized by these sections, for eligible service performed on or after October 7, 1998, to all borrowers with a loan made under the Federal Perkins Loan program regardless of the date the loan was made or the terms of the borrower's promissory note (pages 41238-41239).

Implementation Date of These Regulations

Section 482(c) of the Higher Education Act of 1965, as amended (20 U.S.C. 1089(c)) requires that regulations affecting programs under title IV of the Act be published in final form by November 1 prior to the start of the award year in which they apply. However, that section also permits the Secretary to designate any regulation as one that an entity subject to the regulation may choose to implement earlier. If the Secretary designates a regulation for early implementation, he may specify when and under what conditions the entity may implement it. Under this authority, the Secretary has designated the following regulations for early implementation:
      Section 674.2--Upon publication, institutions may implement the ``satisfactory repayment arrangements'' as defined in this provision.
      Section 674.5(c)(3)--Upon publication, institutions may exclude certain loans from its cohort default rate calculation.
      Section 674.9--Upon publication, institutions may use the criterion that removes a borrower from its cohort default rate to re-establish a borrower's eligibility for Perkins Loans.
      Sections 674.16, 674.31 and 674.45--Upon publication, institutions may implement the credit bureau reporting requirements contained in these sections.
      Section 674.33(f)--Upon publication, institutions may implement incentive repayment programs.
      Sections 674.41, 674.42 and 674.45--Upon publication, institutions may provide borrowers with information on the availability of the Student Loan Ombudsman's office.
      These final regulations contain changes from the NPRM that are explained in the Analysis of Comments and Changes that follow.