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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

Summary of Issue: The HEOA adds public service 

cancellation categories for borrowers who are: 

 Full-time fire fighters with a local, State, or Federal 

fire department or fire district; 

 Full-time faculty members at a Tribal College or 

University; 

 Librarians with a master’s degree in library science who 

are employed in an elementary or secondary school that 

qualifies for Title I funding, or in a public library 

that serves a geographic area that includes one or more 

Title I schools; or 
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 Full-time speech-language pathologists with a master’s 

degree who are working exclusively with Title I eligible 

schools. 

Current borrowers with outstanding balances on loans 

already in repayment and all new borrowers with eligible 

service performed on or after August 14, 2008, in these new 

cancellation categories, will qualify for cancellation, 

regardless of whether the cancellation category appears on 

the borrower’s promissory note.

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 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 
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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 

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 
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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, 

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 of a borrower's Federal Perkins, 

NDSL, or Defense loan for service performed on or after 

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

(e) Cancellation for full-time faculty members at a Tribal 

College or University. (1) An institution must cancel up to 

100 percent of the outstanding balance of a borrower’s 

Federal Perkins, NDSL, or Defense loan for services 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. 

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

outstanding balance of a borrower’s Federal Perkins Loan, 

NDSL, or Defense loan for services as a full-time librarian 

on or after August 14, 2008, provided that the librarian 

(i)Has a master’s degree in library science; and –

(ii) Is employed in an elementary school or secondary 

school that is eligible for assistance under Part A of 
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title I of the Elementary and Secondary Education Act of 

1965; 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. 

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

term geographic area is defined as the school district of a 

local education agency.

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

pathologist. An institution must cancel up to 100 percent 

of the outstanding balance of a borrower’s Federal Perkins 

Loan, NDSL, or Defense loan for full-time employment on or 

after August 14, 2008, as a speech pathologist with a 

master’s degree who is working exclusively with Title I 

eligible schools.

(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 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; 

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

employment.