[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR674.55]

[Page 610-611]
 
                           TITLE 34--EDUCATION
 
 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION
 
PART 674_FEDERAL PERKINS LOAN PROGRAM--Table of Contents
 
                       Subpart D_Loan Cancellation
 
Sec. 674.55  Teacher cancellation--Defense loans.

    (a) Cancellation for full-time teaching. (1) An institution shall 
cancel up to 50 percent of the outstanding balance on a borrower's 
Defense loan for full-time teaching in--
    (i) A public or other nonprofit elementary or secondary school;
    (ii) An institution of higher education; or
    (iii) An overseas Department of Defense elementary or secondary 
school.
    (2) The cancellation rate is 10 percent of the original principal 
loan amount, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for each complete year, or its equivalent, 
of teaching.
    (b) Cancellation for full-time teaching in an elementary or 
secondary school serving low-income students. (1) The institution shall 
cancel up to 100 percent of the outstanding balance on a borrower's 
Defense loan for full-time teaching in a public or other nonprofit 
elementary or secondary school that--
    (i) Is in a school district that qualifies for funds in that year 
under 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 a high concentration of students enrolled at the school are from 
low-income families.
    (2)(i) The Secretary selects schools under paragraph (b)(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 on objective standards and methods. These standards must take 
into account the numbers and percentages of title I children attending 
those schools.
    (3) The Secretary considers all elementary and secondary schools 
operated by the Bureau of Indian Affairs (BIA) or operated on Indian 
reservations by Indian tribal groups under

[[Page 611]]

contract with BIA to qualify as schools serving low-income students.
    (4) For each academic year, the Secretary notifies participating 
institutions of the schools selected under paragraph (b) of this 
section.
    (5) The cancellation rate is 15 percent of the original principal 
loan amount, 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.
    (6) [Reserved]
    (7) Cancellation for full-time teaching under paragraph (b) of this 
section is available only for teaching beginning with academic year 
1966-67.
    (c) Cancellation for full-time teaching of the handicapped. (1) An 
institution shall cancel up to 100 percent of the outstanding balance on 
a borrower's Defense loan, plus interest, for full-time teaching of 
handicapped children in a public or other nonprofit elementary or 
secondary school system.
    (2) The cancellation rate is 15 percent of the original principal 
loan amount, 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.
    (3) A borrower qualifies for cancellation under this paragraph only 
if a majority of the students whom the borrower teaches are handicapped 
children.
    (4) Cancellation for full-time teaching under paragraph (c) of this 
section is available only for teaching beginning with the academic year 
1967-68.
    (d) Teaching in a school system. The Secretary considers a borrower 
to be teaching in a public or other nonprofit elementary or secondary 
school system only if the borrower is directly employed by the school 
system.
    (e) 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.

(Authority: 20 U.S.C. 425(b)(3))

[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 
61414, Nov. 30, 1994]