| DCLPublicationDate: 6/1/95 DCLID: CB-95-14 AwardYear: Summary: This letter provides information concerning the ASSIGNMENT of Federal Perkins Loans and National Direct (or Defense) Student Loans (NDSLs) in default to the U.S. Department of Education (ED) for collection. CB-95-14 June 1995 FEDERAL PERKINS LOAN PROGRAM (Formerly National Direct/Defense Student Loan Programs) ASSIGNMENT SUBMISSION PROCEDURES FOR SCHOOLS WITH COHORT DEFAULT RATES OF 20 PERCENT AND HIGHER AS OF JUNE 30, 1993 SUMMARY: This letter provides information concerning the ASSIGNMENT of Federal Perkins Loans and National Direct (or Defense) Student Loans (NDSLs) in default to the U.S. Department of Education (ED) for collection. Dear Colleague: Enclosed are the procedures for submitting defaulted Federal Perkins Loan, National Direct Student Loan, and National Defense Student Loan notes to ED for assignment under Section 463(a)(5) of the Higher Education Act of 1965, as amended (HEA). Any note that your institution "assigns" to ED is assigned without recompense, and all rights, authorities, and privileges associated with that note are transferred to the U.S. Government. All funds collected on these notes will become the property of the U.S. Government. NOTE: Assignment of such defaulted loans does not have any bearing on the calculation of your cohort default rate. An institution with a cohort default rate of 20 percent or greater as of June 30, 1992, must submit documentation that it has complied with all due diligence requirements for any loans it proposes to assign. PLEASE NOTE THAT THESE PROCEDURES HAVE BEEN UPDATED TO INCORPORATE ALL THE REVISIONS THAT ARE CURRENTLY PERTINENT TO THIS PROCESS AS THE RESULT OF THE 1992 REAUTHORIZATION OF THE HIGHER EDUCATION ACT. ED DOES NOT EXPECT TO REISSUE THESE PROCEDURES UNTIL MAY 31, 1998. NOTIFICATION OF ANY REVISION TO THE DUE DILIGENCE REQUIREMENTS, OR ANY CLARIFICATION OF PROCEDURES, WILL BE TRANSMITTED TO YOUR INSTITUTION THROUGH BRIEF "DEAR COLLEAGUE" LETTERS. THE FOLLOWING REVISIONS HAVE BEEN MADE TO THESE PROCEDURES: 1) The minimum outstanding balance on an account that may be assigned has been reduced to $25. Correspondingly, any defaulted account with an outstanding balance of less than $25 may be written off. 2) All accounts will be accepted by ED for assignment at the interest rate reflected in the promissory note, unless superseded by a legal judgment. ED acceptance of any promissory note bearing an interest rate that is not in compliance with ED regulations for that timeframe will be reported to the ED Campus-Based Financial Management Section for reconciliation with the assigning school. 3) ED is now requesting that institutions identify and explain the determination of all outstanding collection costs for any account being submitted for assignment. 4) All institutions have been required to report all accounts on which advances have been made on or since July 23, 1992, to NATIONAL credit bureaus. Reporting of accounts to regional credit bureaus is no longer sufficient for such accounts. 5) Any defaulted Federal Perkins Loan signed for by a minor on or after July 23, 1992, being submitted for assignment, cannot bear the signature of a cosigner. 6) Institutions must now submit accounts for assignment using the enclosed ED Form 553 through its revised expiration date of May 31, 1998. A copy of that form is included in this package. All computer facsimile ED Form 553s must be resubmitted for approval by ED following the revised procedures contained herein. Accounts may be submitted for assignment at any time of the program year. IT IS ALWAYS TO THE BENEFIT OF YOUR INSTITUTION TO READ AND FOLLOW THE ENCLOSED PROCEDURES VERY CAREFULLY AS REFINEMENTS ARE CONTINUOUSLY MADE. ANY ACCOUNT NOT STRICTLY ADHERING TO THESE PROCEDURES WILL BE REJECTED.. Questions regarding assignment procedures should be directed to the offices listed in Section VI, "Information Sources," of the enclosed assignment procedures. INSTITUTIONS SHOULD NOT CONTACT THE ED-CONTRACTED ASSIGNMENT CENTER, SINCE THE CENTER DOES NOT HAVE THE AUTHORITY OR PROGRAM KNOWLEDGE SUFFICIENT TO RESOLVE OR ASSIST SCHOOLS TO CORRECT DEFICIENSCIES IN THEIR ASSIGNMENT SUBMISSIONS, AND THE CENTER'S CONTRACT DOES NOT REQUIRE THE PROVISION OF SERVICES DIRECTLY TO SCHOOLS. Please note the appropriate ED regional office numbers to ascertain payment status of past assignments. Sincerely yours, Leo Kornfeld Senior Assistant to the Secretary Enclosures |