| DCLPublicationDate: 7/1/95 DCLID: CB-95-17 AwardYear: Summary: Limitations on Write-offs in the Federal Perkins Loan Program. JULY 1995 CB-95-17 SUBJECT: Limitations on Write-offs in the Federal Perkins Loan Program. REFERENCE: Section 674.47 of the Federal Perkins Loan Program Regulations. Dear Colleague: It has come to our attention that some institutions participating in the Federal Perkins Loan Program (Federal Perkins) are writing-off small balance nondefaulted Perkins loans. The Federal Perkins regulations provide no authority for such write-offs. Section 674.47 of the Federal Perkins regulations, Costs Chargeable to the Fund, provides regulatory authority for charging the Federal Perkins Loan Fund (the Fund) for the costs of actions taken to collect past-due payments on a Federal Perkins loan. While §674.47(g) authorizes write-offs of Federal Perkins loans, in the context of §674.47 as a whole, this paragraph does not authorize institutions to write-off small balance nondefaulted accounts. Any institution that has been writing off small balance nondefaulted Federal Perkins loans must stop these unauthorized write-offs immediately. Any institution that writes-off small balance nondefaulted Federal Perkins loans will be required to reimburse the Fund for all such amounts. The U.S. Department of Education (the Department) consistently provided this guidance since the publication of our December 21, 1992 final regulations, which made changes to §674.47. Department staff have been advising institutions at various meetings and major program conferences, as well as personally, of the Department's interpretation of the regulations in this area. An amendment to §674.47(g) clarifying this policy was published in the Federal Register on November 30, 1994. I am hopeful that this clarifies the Department's position on this issue. Please contact Susan M. Morgan on (202) 708-8242, if you have any questions. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance |