Summary: Limitations on Write-offs in the Federal Perkins Loan Program.
SUBJECT: Limitations on Write-offs in the Federal Perkins
REFERENCE: Section 674.47 of the Federal Perkins Loan Program
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
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.
Elizabeth M. Hicks
Deputy Assistant Secretary
for Student Financial Assistance