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In November, the Department of Education issued two final regulations which effected the Perkins Loan Program. The first item clarifies the terms of the 24% cap on collection costs for rehabilitation borrowers. The 24% cap is the maximum collection charge that can be assesed to borrowers during rehabilitation. The Department clarified that the cap does not apply to borrowers who default on their loan after rehabilitation. The second item discuses the right of sovern immunity. The Department states in 679.43(2): In the case of a bankruptcy proceeding under either Chapter 7 or Chapter 13 of the Bankruptcy Code in which the repayment plan proposes that the borrower repay less than the full amount owed on the loan, the institution has an authoritative determination by an appropriate State official that in the opinion of the State official, the institution is an agency of the State and is, on that basis, under applicable State law, immune from suit. This information was summarized from the Federal Register, November 1, 2000, page 65611-65614.
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