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Issue 12 

Proposed Regulatory Language 

Team II—School-based Loan Issues 

Origin: HEOA section 465 

Issue: Expansion of Teacher, Head Start, 

and Law Enforcement Cancellation 

Categories 

Statutory Cite: HEA section 465(a) 

Regulatory Cite: §§674.53, 674.57, 674.58 

DCL page reference: Page 135

Summary of Issue: The HEOA expanded the existing teacher, 

Head Start, and law enforcement cancellation categories. 

These cancellations categories have been expanded to 

include: 

 A teacher in a designated low-income elementary or 

secondary school who is employed by, or working in a 

school operated by, an educational service agency; 

 Full-time special education teacher, including 

teachers of infants, toddlers, children, or youth with 

disabilities in a public or other nonprofit elementary 

or secondary school system, including a system 

administered by an educational service agency; 
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 Full-time staff members in a pre-kindergarten or 

childcare program that is licensed or regulated by the 

State; 

 Full-time attorneys employed in Federal Public 

Defender Organizations or Community Defender 

Organizations, established in accordance with Section 

3006A(g)(2) of Title 18, U.S.C. 

Current borrowers with outstanding balances on loans 

already in repayment and for all new borrowers with 

eligible service performed on or after August 14, 2008, in 

these expanded cancellation categories, will qualify a 

borrower for cancellation, regardless of whether 

information on the expansion of the cancellation category 

appears on the borrower’s promissory note. 

Sec. 674.51 Special definitions. 

 The following definitions apply to this subpart: 

 (a) Academic year or its equivalent for elementary and 

secondary schools and special education: (1) One complete 

school year, or two half years from different school years, 

excluding summer sessions, that are complete and 

consecutive and generally fall within a 12-month period. 

 (2) If such a school has a year-round program of 

instruction, the Secretary considers a minimum of nine 

consecutive months to be the equivalent of an academic 

year. 
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 (b) Academic year or its equivalent for institutions of 

higher education: A period of time in which a full-time 

student is expected to complete-- 

 (1) The equivalent of 2 semesters, 2 trimesters, or 3 

quarters at an institution using credit hours; or 

 (2) At least 900 clock hours of training for each 

program at an institution using clock hours. 

 (c) Title I Children: Children of ages 5 through 17 who 

are counted under section 1124(c)(1) of the Elementary and 

Secondary Education Act of 1965, as amended. 

 (d) Children and youth with disabilities Child with a 

Disability: A Cchildren and or youth from ages 3 through 

21, inclusive, who requires special education and related 

services because he or she has they have disabilities as 

defined in section 602(a)(1) 602(3) of the Individuals with 

Disabilities Education Act. 

(e) Community Defender Organizations: A defender 

organization established in accordance with section 

3006A(g)(2) of title 18, United States Code.

 (f) Early intervention services: Those services defined 

in section 672(2) of the Individuals with Disabilities 

Education Act that are provided to infants and toddlers 

with disabilities. 

 (g) Educational service agency: A regional public 

multi-service agency authorized by State law to develop, 

manage, and provide services or programs to local 

educational agencies as defined in section 9101 of the 

Elementary and Secondary Education Act.

 (h) Elementary school: A school that provides 

elementary education, including education below grade 1, as 

determined by-- 
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 (1) State law; or 

 (2) The Secretary, if the school is not in a State. 

 (i) Federal Public Defender Organization: A defender 

organization established in accordance with section 

3006A(g)(2) of title 18, United States Code.

(j) Faculty member: An educator or tenured individual who 

is employed by a Tribal College or University, as that term 

is defined in section 316 of the HEA, to teach, research, 

or perform administrative functions, such as deans and 

department heads. An educator may be an instructor, 

lecturer, lab faculty, assistant professor, associate 

professor or full professor. 

 (jk) Firefighter: A firefighter is an individual that 

is employed and provides the following services-

(1) Extinguishes destructive fires;

(2) Provides community disaster support and, as a first 

responder, provides emergency medical services;

(3) Conducts search and rescue; and

(4) Provides hazardous materials mitigation (HAZMAT).

 (kl) Handicapped children: Children of ages 3 through 

21 inclusive who require special education and related 

services because they are-- 

 (1) Mentally retarded; 

 (2) Hard of hearing; 

 (3) Deaf; 

 (4) Speech and language impaired; 

 (5) Visually handicapped; 

 (6) Seriously emotionally disturbed; 

 (7) Orthopedically impaired; 

 (8) Specific learning disabled; or 

 (9) Otherwise health impaired. 
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 (lm) High-risk children: Individuals under the age of 

21 who are low- income or at risk of abuse or neglect, have 

been abused or neglected, have serious emotional, mental, 

or behavioral disturbances, reside in placements outside 

their homes, or are involved in the juvenile justice 

system. 

 (mn) Infants and or toddlers with a disabilityies: An

Iinfants and or toddlers from birth to age 2, inclusive, 

who need early intervention services for specified reasons, 

as defined in section 672(1) 632(5)(A) of the Individuals 

with Disabilities Education Act. 

 (no) Librarian: A librarian is an information 

professional trained in library and information science.

 (op) Local educational agency: (1) A public board of 

education or other public authority legally constituted 

within a State to administer, direct, or perform a service 

function for public elementary or secondary schools in a 

city, county, township, school district, other political 

subdivision of a State; or such combination of school 

districts of counties as are recognized in a State as an 

administrative agency for its public elementary or 

secondary schools. 

 (2) Any other public institution or agency having 

administrative control and direction of a public elementary 

or secondary school. 

 (pq) Low-income communities: Communities in which there 

is a high concentration of children eligible to be counted 

under title I of the Elementary and Secondary Education Act 

of 1965, as amended. 
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 (qr) Master’s Degree: A postgraduate academic degree 

awarded after the completion of an academic program of one 

to six years in duration.

 (rs) Medical technician: An allied health professional 

(working in fields such as therapy, dental hygiene, medical 

technology, or nutrition) who is certified, registered, or 

licensed by the appropriate State agency in the State in 

which he or she provides health care services. An allied 

health professional is someone who assists, facilitates, or 

complements the work of physicians and other specialists in 

the health care system. 

 (st) Nurse: A licensed practical nurse, a registered 

nurse, or other individual who is licensed by the 

appropriate State agency to provide nursing services. 

 (tu) Qualified professional provider of early 

intervention services: A provider of services as defined in 

section 672(2) 632 of the Individuals with Disabilities 

Education Act. 

 (uv) Secondary school: (1) A school that provides 

secondary education, as determined by-- 

 (i) State law; or 

 (ii) The Secretary, if the school is not in a State. 

 (2) However, State laws notwithstanding, secondary 

education does not include any education beyond grade 12. 

 (vw) State education agency: (1) The State board of 

education; or 

 (2) An agency or official designated by the Governor or 

by State law as being primarily responsible for the State 

supervision of public elementary and secondary schools. 

 (wx) Speech Language Pathologist: An individual who 

studies disorders that affect a person’s speech, language, 
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cognition, voice, swallowing and the rehabilitative or 

corrective treatment of physical or cognitive 

deficits/disorders resulting in difficulty with 

communication, swallowing, or both.

 (xy) Teacher: (1) A teacher is a person who provides-- 

 (i) Direct classroom teaching; 

 (ii) Classroom-type teaching in a non-classroom 

setting; or 

 (iii) Educational services to students directly related 

to classroom teaching such as school librarians or school 

guidance counselors. 

 (2) A supervisor, administrator, researcher, or 

curriculum specialist is not a teacher unless he or she 

primarily provides direct and personal educational services 

to students. 

 (3) An individual who provides one of the following 

services does not qualify as a teacher unless that 

individual is licensed, certified, or registered by the 

appropriate State education agency for that area in which 

he or she is providing related special educational 

services, and the services provided by the individual are 

part of the educational curriculum for handicapped 

children: 

 (i) Speech and language pathology and audiology; 

 (ii) Physical therapy; 

 (iii) Occupational therapy; 

 (iv) Psychological and counseling services; or 

 (v) Recreational therapy. 

 (yz) Teaching in a field of expertise: The majority of 

classes taught are in the borrower's field of expertise. 
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 (zaa) Total and permanent disability: The condition of 

an individual who is unable to work and earn money because 

of an injury or illness that is expected to continue 

indefinitely or result in death. 

(aabb) A Tribal College or University means an institution 

that-

(i) Qualifies for funding under the Tribally Controlled 

Colleges and Universities Assistance Act of 1978 (25 U.S.C. 

1801 et seq.) or the Navajo Community College Assistance 

Act of 1978 (25 U.S.C. 640a note; or

(ii) Is cited in section 532 of the Equity in Education 

Land Grant Status Act of 1994 (7 U.S.C. 301 note).

Sec. 674.53 Teacher cancellation--Federal Perkins, NDSL and 

Defense loans. 

 

 (a) Cancellation for full-time teaching in an elementary 

or secondary school serving low-income students. (1)(i) An 

institution must cancel up to 100 percent of the 

outstanding loan balance on a Federal Perkins loan or an 

NDSL made on or after July 23, 1992, for full-time teaching 

in a public or other nonprofit elementary or secondary 

school. 

 (ii) An institution must cancel up to 100 percent of 

the outstanding loan balance on a Federal Perkins, NDSL or 

Defense loan made prior to July 23, 1992, for teaching 

service performed on or after October 7, 1998, if the 

cancellation benefits provided under this section are not 

included in the terms of the borrower's promissory note. 
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(iii) An institution must cancel up to 100 percent of the 

outstanding balance of a Federal Perkins, NDSL, or Defense 

loan for teaching service performed on or after August 14, 

2008, in an educational service agency.

 (2) The borrower must be teaching full-time in a public 

or other nonprofit elementary or secondary school that-- 

 (i) Is in a school district that qualified for funds, 

in that year, under part A of title I of the Elementary and 

Secondary Education Act of 1965, as amended; and 

 (ii) Has been selected by the Secretary based on a 

determination that more than 30 percent of the school's or 

educational service agency’s total enrollment is made up of 

title I children. 

 (3) For each academic year, the Secretary notifies 

participating institutions of the schools and educational 

service agencies selected under paragraph (a) of this 

section. 

 (4) (i) The Secretary selects schools and educational 

service agencies under paragraph (a)(1) of this section 

based on a ranking by the State education agency. 

 (ii) The State education agency shall base its ranking 

of the schools and educational service agencies on 

objective standards and methods. These standards must take 

into account the numbers and percentages of title I 

children attending those schools and educational service 

agencies. 

 (iii) For each academic year, the Secretary notifies 

participating institutions of the schools selected under 

paragraph (a) of this section.

 (5) The Secretary considers all elementary and 

secondary schools operated by the Bureau of Indian Affairs 
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(BIA) or operated on Indian reservations by Indian tribal 

groups under contract with BIA to qualify as schools 

serving low-income students. 

 (6) A teacher, who performs service in a school or 

educational service agency that meets the requirement of 

paragraph (a)(1) of this section in any year and in a 

subsequent year fails to meet these requirements, may 

continue to teach in that school or educational service 

agency and will be eligible for loan cancellation pursuant 

to paragraph (a) of this section in subsequent years. 

 (7) If a list of eligible institutions in which a 

teacher performs services under paragraph (a)(1) of this 

section is not available before May 1 of any year, the 

Secretary may use the list for the year preceding the year 

for which the determination is made to make the service 

determination. 

 (b) Cancellation for full-time teaching in special 

education. (1) An institution must cancel up to 100 percent 

of the outstanding balance on a borrower's Federal Perkins 

loan or NDSL loan made on or after July 23, 1992, for the 

borrower's service as a full-time special education teacher 

of infants, toddlers, children, or youth with disabilities, 

in a public or other nonprofit elementary or secondary 

school system. 

 (2) An institution must cancel up to 100 percent of the 

outstanding loan balance on a Federal Perkins, NDSL or 

Defense loan made prior to July 23, 1992, for teaching 

service performed on or after October 7, 1998, if the 

cancellation benefits provided under this section are not 

included in the terms of the borrower's promissory note. 
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(3) An institution must cancel up to 100 percent of the 

outstanding balance on a borrower’s Federal Perkins, NDSL,

or Defense loan for borrower’s service on or after August 

14, 2008, as a full-time special education teacher of 

infants, toddlers, children, or youth with disabilities, in 

an educational service agency.

(c) Cancellation for full-time teaching in fields of 

expertise. (1) An institution must cancel up to 100 percent 

of the outstanding balance on a borrower's Federal Perkins 

loan or NDSL made on or after July 23, 1992, for full-time 

teaching in mathematics, science, foreign languages, 

bilingual education, or any other field of expertise where 

the State education agency determines that there is a 

shortage of qualified teachers. 

 (2) An institution must cancel up to 100 percent of the 

outstanding loan balance on a Federal Perkins, NDSL or 

Defense loan made prior to July 23, 1992, for teaching 

service performed on or after October 7, 1998, if the 

cancellation benefits provided under this section are not 

included in the terms of the borrower's promissory note. 

 (d) Cancellation rates. (1) To qualify for cancellation 

under paragraph (a), (b), or (c) of this section, a 

borrower shall must teach full- time for a complete 

academic year or its equivalent. 

 (2) Cancellation rates are-- 

 (i) 15 percent of the original principal loan amount 

plus the interest on the unpaid balance accruing during the 

year of qualifying service, for each of the first and 

second years of full-time teaching; 

 (ii) 20 percent of the original principal loan amount, 

plus the interest on the unpaid balance accruing during the 
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year of qualifying service, for each of the third and 

fourth years of full-time teaching; and 

 (iii) 30 percent of the original principal loan amount, 

plus the interest on the unpaid balance accruing during the 

year of qualifying service, for the fifth year of full-time 

teaching. 

 (e) Teaching in a school system. The Secretary 

considers a borrower to be teaching in a public or other 

nonprofit elementary or secondary school system or an 

educational service agency only if the borrower is directly 

employed by the school system. 

 (f) Teaching children and adults. A borrower who 

teaches both adults and children qualifies for cancellation 

for this service only if a majority of the students whom 

the borrower teaches are children. 

Sec. 674.58 Cancellation for service in an Early Childhood 

Education Program. Head Start program.

 (a)(1) An institution must cancel up to 100 percent of 

the outstanding balance on a borrower's NDSL or Federal 

Perkins loan, for service as a full-time staff member in a 

Head Start program. 

 (2) An institution must cancel up to 100 percent of the 

outstanding balance on a Defense loan for service as a 

full-time staff member in a Head Start program performed on 

or after October 7, 1998, if the cancellation benefits 

provided under this section are not included in the terms 

of the borrower's promissory note. 

(3) An institution must cancel up to 100 percent of the 

outstanding balance of a borrower’s NDSL, Defense, or 
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Federal Perkins loan for service performed on or after 

August 14, 2008, as a full-time staff member of a prekindergarten or childcare program that is licensed or 

regulated by the state.

(34) The Head Start, pre-kindergarten or child care program 

in which the borrower serves must operate for a complete 

academic year, or its equivalent. 

 (45) In order to qualify for cancellation, the 

borrower's salary may not exceed the salary of a comparable 

employee working in the local educational agency of the 

area served by the local Head Start, pre-kindergarten or 

child care program. 

 (b) The cancellation rate is 15 percent of the original 

loan principal, plus the interest on the unpaid balance 

accruing during the year of qualifying service, for each 

complete academic year, or its equivalent, of full-time 

teaching service. 

 (c)(1) ``Head Start'' is a preschool program carried 

out under the Head Start Act (subchapter B, chapter 8 of 

title VI of Pub. L. 97-35, the Budget Reconciliation Act of 

1981, as amended; formerly authorized under section 

222(a)(1) of the Economic Opportunity Act of 1964). (42 

U.S.C. 2809 (a) (1)) 

(2) A prekindergarten program is a State-funded program 

that serves children from birth through six and addresses 

the children’s cognitive (including language, early 

literacy, and early mathematics), social, emotional, and 

physical development.

(3) A child care program is a program that is licensed and 

regulated by the state and provides child care services for 

fewer than 24 hours per day per child, unless care in 
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excess of 24 hours is needed due to the nature of the 

parents’ work.

(24)”Full-time staff member” is a person regularly employed 

in a full-time professional capacity to carry out the 

educational part of a Head Start, pre-kindergarten or child 

care program. 

Sec. 674.57 Cancellation for law enforcement or corrections 

officer service--Federal Perkins, NDSL and Defense loans. 

 (a)(1) An institution must cancel up to 100 percent of 

the outstanding balance on a borrower's Federal Perkins or 

NDSL made on or after November 29, 1990, for full-time 

service as a law enforcement or corrections officer for an 

eligible employing agency. 

 (2) An institution must cancel up to 100 percent of the 

outstanding loan balance on a Federal Perkins, NDSL, or 

Defense loan made prior to November 29, 1990, for law 

enforcement or correction officer service performed on or 

after October 7, 1998, if the cancellation benefits 

provided under this section are not included in the terms 

of the borrower's promissory note. 

 (3) An eligible employing agency is an agency—

 (i) That is a local, State, or Federal law enforcement 

or corrections agency; 

 (ii) That is public-funded; and 

 (iii) The principal activities of which pertain to 

crime prevention, control, or reduction or the enforcement 

of the criminal law. 
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 (4) Agencies that are primarily responsible for 

enforcement of civil, regulatory, or administrative laws 

are ineligible employing agencies. 

 (5) A borrower qualifies for cancellation under this 

section only if the borrower is-- 

 (i) A sworn law enforcement or corrections officer; or 

 (ii) A person whose principal responsibilities are 

unique to the criminal justice system. 

 (6) To qualify for a cancellation under this section, 

the borrower's service must be essential in the performance 

of the eligible employing agency's primary mission. 

 (7) The agency must be able to document the employee's 

functions. 

 (8) A borrower whose principal official 

responsibilities are administrative or supportive does not 

qualify for cancellation under this section. 

 (b)(1) An institution must cancel up to 100 percent of 

the outstanding balance of a borrower’s Federal Perkins, 

NDSL, or Defense loan for service performed on or after 

August 14, 2008, as a full-time attorney employed in 

Federal Public Defender Organizations or Community Defender 

Organizations, established in accordance with Section 

3006A(g)(2) of Title 18, U.S.C.

 (bc)(1) To qualify for cancellation under paragraph (a) 

of this section, a borrower shall must work full-time for 

12 consecutive months. 

 (2) Cancellation rates are-- 

 (i) 15 percent of the original principal loan amount 

plus the interest on the unpaid balance accruing during the 

year of qualifying service, for each of the first and 

second years of full-time employment; 
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 (ii) 20 percent of the original principal loan amount 

plus the interest on the unpaid balance accruing during the 

year of qualifying service, for each of the third and 

fourth years of full-time employment; and 

 (iii) 30 percent of the original principal loan amount 

plus the interest on the unpaid balance accruing during the 

year of qualifying service, for the fifth year of full-time 

employment.