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DRAFT for discussion at 3rd session

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Issue 13

Proposed Regulatory Language

Team II - School-based Loan Issues

Origin: HEOA section 465

Issue: Addition of New Public Service 

Cancellation Categories

Statutory Cite: HEA section 465(a)

Regulatory Cite: §674.56

DCL page reference: Page 136

Status: Tentative agreement reached

Regulatory language:

Sec. 674.56 Employment cancellation--Federal Perkins, NDSL 

and Defense loans.

 (a) Cancellation for full-time employment as a nurse or 

medical technician. (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 July 23, 1992, for 

full-time employment as a nurse or medical technician 

providing healthcare services. 

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

outstanding balance on a Federal Perkins, NDSL or Defense 
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loan made prior to July 23, 1992, for full-time service as 

a nurse or medical technician performed on or after October 

7, 1998, if the cancellation benefits provided under this 

section are not included in the borrower's promissory note.

 (b) Cancellation for full-time employment in a public 

or private nonprofit child or family service agency. (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 service as a fulltime employee in a public or private nonprofit child or 

family service agency who is providing services directly 

and exclusively to high-risk children who are from lowincome communities and the families of these children, or 

who is supervising the provision of services to high-risk 

children who are from low-income communities and the 

families of these children. To qualify for a child or 

family service cancellation, a non-supervisory employee of 

a child or family service agency must be providing services 

only to high-risk children from low- income communities and 

the families of these children. The employee must work 

directly with the high-risk children from low-income 

communities, and the services provided to the children's 
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families must be secondary to the services provided to the 

children.

 (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 employment in 

a child or family service agency 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.

 (c) Cancellation for service as a qualified 

professional provider of early intervention services. (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 July 23, 1992, for the borrower's service 

as a full-time qualified professional provider of early 

intervention services in a public or other nonprofit 

program under public supervision by the lead agency as 

authorized in section 676(b)(9) 632 of the Individuals with 

Disabilities Education Act.

 (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 early 

intervention service performed on or after October 7, 1998, 
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if the cancellation benefits provided under this section 

are not included in the terms of the borrower's promissory 

note.

(d) Cancellation for full-time employment as a 

firefighter to a local, State, or Federal fire department 

or fire district. An institution must cancel up to 100 

percent of the outstanding balance on a borrower's Federal 

Perkins, NDSL, or Defense loan for service that includes 

August 14, 2008, or begins on or after that date, on or 

after August 14, 2008, as a full-time firefighter.

(e) Cancellation for full-time employment as a 

faculty member at a Tribal College or University. (1) An 

institution must cancel up to 100 percent of the 

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

or Defense loan for services that includes August 14, 2008, 

or begins on or after that date, as a full-time faculty 

member at a Tribal College or University. on or after 

August 14, 2008.

(f) Cancellation for full-time employment as a 

librarian with a master’s degree. (1) An institution must 

cancel up to 100 percent of the outstanding balance on a 

borrower’s Federal Perkins Loan, NDSL, or Defense loan for 

services that includes August 14, 2008, or begins on or 
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after that date, as a full-time librarian, provided that 

the individual is--

(i) Is a librarian with a master’s degree (as defined 

in §674.51(o)); and 

(ii) Is employed in an elementary school or secondary 

school that is eligible for assistance under Ppart A of 

title I of the Elementary and Secondary Education Act of 

1965, as amended; or 

(iii) Is employed by a public library that serves a 

geographic area that contains one or more schools eligible 

for assistance under Ppart A of title I of the Elementary 

and Secondary Act of 1965, as amended. 

(2) For the purposes of paragraph (f) of this 

section, the term geographic area is defined as the area 

served by the local school districtof a local education 

agency.

(g) Cancellation for full-time employment as a speech 

pathologist with a master’s degree. An institution must 

cancel up to 100 percent of the outstanding balance on a 

borrower’s Federal Perkins Loan, NDSL, or Defense loan for 

full-time employment that includes August 14, 2008, or 

begins on or after that date, August 14, 2008, as a speech 

pathologist with a master’s degree who is working 
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exclusively with eligible schools eligible for funds under 

part A of title I of the Elementary and Secondary Act of 

1965, as amended.

(dh) Cancellation rates. (1) To qualify for 

cancellation under paragraphs (a), (b), and (c),(d), (e), 

(f), and (g) of this section, a borrower must work fulltime 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;

 (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.
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Issue 13

Amendatory Language

Team II – School-based Loan Issues

x. Section 674.56 is amended by:

A. Revising paragraph (c)(1).

B. Redesignating paragraph (d) as paragraph (h).

C. Adding paragraphs (d), (e), (f), and (g), 

respectively.

C. Revising newly redesignated paragraph (h).

The revisions and additions read as follows:

§674.56 Employment cancellation--Federal Perkins, NDSL, 

and Defense loans

* * * * *

(c) Cancellation for service as a qualified 

professional provider of early intervention services. (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 July 23, 1992, for the borrower's service 

as a full-time qualified professional provider of early 

intervention services in a public or other nonprofit 

program under public supervision by the lead agency as 
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authorized in section 632 of the Individuals with 

Disabilities Education Act.

* * * * *

(d) Cancellation for full-time employment as a 

firefighter to a local, State, or Federal fire department 

or fire district. An institution must cancel up to 100 

percent of the outstanding balance on a borrower's Federal 

Perkins, NDSL, or Defense loan for service that includes 

August 14, 2008, or begins on or after that date, as a 

full-time firefighter.

(e) Cancellation for full-time employment as a

faculty member at a Tribal College or University. An 

institution must cancel up to 100 percent of the 

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

or Defense loan for service that includes August 14, 2008, 

or begins on or after that date, as a full-time faculty 

member at a Tribal College or University. 

(f) Cancellation for full-time employment as a 

librarian with a master’s degree. (1) An institution must 

cancel up to 100 percent of the outstanding balance on a 

borrower’s Federal Perkins Loan, NDSL, or Defense loan for 

service that includes August 14, 2008, or begins on or 
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after that date, as a full-time librarian, provided that 

the individual--

(i) Is a librarian with a master’s degree; and 

(ii) Is employed in an elementary school or secondary 

school that is eligible for assistance under part A of 

title I of the Elementary and Secondary Education Act of 

1965, as amended; or 

(iii) Is employed by a public library that serves a 

geographic area that contains one or more schools eligible 

for assistance under part A of title I of the Elementary 

and Secondary Act of 1965, as amended. 

(2) For the purposes of paragraph (f) of this 

section, the term geographic area is defined as the area 

served by the local school district.

(g) Cancellation for full-time employment as a speech 

pathologist with a master’s degree. An institution must 

cancel up to 100 percent of the outstanding balance on a 

borrower’s Federal Perkins Loan, NDSL, or Defense loan for 

full-time employment that includes August 14, 2008, or 

begins on or after that date, as a speech pathologist with 

a master’s degree who is working exclusively with schools 

eligible for funds under part A of title I of the 

Elementary and Secondary Act of 1965, as amended.
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* * * * *

(h) Cancellation rates. (1) To qualify for 

cancellation under paragraphs (a), (b), (c), (d), (e), (f), 

and (g) of this section, a borrower must work full-time for 

12 consecutive months.

* * * * *