Summary: This letter provides information concerning the Assignment of defaulted Federal Perkins Loans and National Direct (or Defense) Student Loans (NDSLs) to the U.S. Department of Education (ED) for collection
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 defaulted Federal Perkins Loans and National Direct (or Defense) Student Loans (NDSLs) to the U.S. Department of Education (ED) for collection.
Enclosed are procedures for institutions 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). When an institution closes or liquidates its loan portfolio, it is required to use these procedures when submitting defaulted and non-defaulted loans made under this program.
Any loan note an 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 become the property of the U.S. Government. Assignment of such defaulted loans does not have any bearing on the calculation of the institutions 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 currently pertinent to the Federal Perkins Loan program as of September 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.
Institutions must submit accounts for assignment using the enclosed ED Form 553 through its revised August 31, 2001 expiration. As in the past, if your institution wants to use a computer facsimile of the ED Form 553 (in place of using the actual form), it must submit that computer form for approval to ED, prior to its use. Accounts may be submitted for assignment at any time during the program year.
Please carefully read and follow the enclosed procedures 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 because the Center does not have the authority or program knowledge sufficient to resolve or assist schools to correct deficiencies in their assignment submissions.
Please note the appropriate ED regional office numbers to ascertain payment status of past assignments. Questions on closed school procedures can be directed to the State Liaison and Closed School Branch on (202) 205-2275. Questions on liquidation procedures can be directed to the Campus-Based Program Office on (202) 708-9183. Questions on Perkins loan assignments can be directed to the Debt Collection Service at (202) 708-4766.
Diane E. Rogers
Acting Deputy Assistant Secretary
Student Financial Assistance Programs