Publication Date: August 2003
DCL ID: CB-03-12
Revised Assignment Form and Procedures for Assigning Perkins Loans
Posted on 08-04-2003
August 2003
CB-03-12
SUBJECT: Revised Assignment Form and Procedures for Assigning Perkins Loans
SUMMARY: This letter provides the revised form and procedures for the assignment of defaulted Federal Perkins Loans, National Direct Student Loans (NDSL) and National Defense Student Loans (Defense) to the U.S. Department of Education (ED) for collection.
Dear Partner:
The revised assignment form and procedures that are attached to this letter streamline the process for assigning defaulted Federal Perkins Loans, National Direct Student Loans, and National Defense Student Loans to the Department of Education (ED). In addition, institutions that close or otherwise wish to end their participation in the Federal Perkins Loan Program must liquidate their Perkins loan portfolios by assigning their outstanding defaulted and non-defaulted Perkins Loans to ED in accordance with these procedures and the liquidation procedures provided in Dear Partner Letter CB-00-05.[1]
Institutions may assign defaulted loans to ED at any time during the program year. All loans that an institution assigns to ED are assigned without recompense. ED will not reimburse the institution's Federal Perkins Loan Fund for the loans, and all rights, authorities, and privileges associated with the loan are transferred to the United States. The institution is relieved of incurring additional expenses in attempting to collect on the loan.Any funds collected by ED on these loans are the property of the United States. Note that, assignment of defaulted loans will not affect the calculation of the institution's Perkins Loan cohort default rate.
We recognize that an institution may have exhausted all of its available collection options on some of their defaulted Perkins loans. We encourage these institutions to assign these loans to ED so that we can take additional steps to recover the loan funds. We have collection tools that are not available to institutions, such as administrative wage garnishment, federal offset, and litigation by the Department of Justice.
Last year we significantly reduced the required supporting documentation for an assigned defaulted Perkins loan. Supporting documentation such as the signed repayment schedule, the recall notice, and the acceleration notice are no longer required (see Dear Colleague Letter CB-02-05). This year, we've made major changes to the assignment process itself. These changes are designed to make the process simpler and less cumbersome. We have streamlined the assignment process by:
- Limiting the requirements for pre-approval of items in the submission package to instances in which the promissory note is missing or defective or judgment information is missing or incomplete.
- Eliminating the requirement that the written explanation of items that need clarification or justification be submitted on institutional letterhead.
- Redesigning the Perkins Assignment Form as a two-part form consisting of the Institutional Certification page (to be completed for each batch of submissions) and the Borrower and Loan Information page (to be completed for each individual account that is submitted).
- Deleting Items such as "Entity Number", "Work Address of Borrower" and "Deferment Information" from the Perkins Assignment Form.
- Making Perkins Assignment Form Items such as "Social Security Number of Cosigner" and "Cancellation Information" optional.
We have also reorganized and clarified the information provided in the Assignment Submission Procedures (Attachment 1) and the Assignment Form Instructions (Attachment 2).
Institutions must submit accounts for assignment using the Perkins Assignment Form (Attachment 3). A photocopy or a computer facsimile of the form is acceptable. We no longer require institutions to submit computer facsimiles of the Perkins Assignment Form for our approval.
Currently, we can accept the Perkins Assignment Form in PDF or WORD format. However, due to requirements of the Privacy Act, we cannot accept assignment packages via e-mail. The Borrower and Loan Information page of the Perkins Assignment Form can be submitted to ED using a CD-ROM or a 3.5-inch diskette. Schools submitting assignments using these disk formats should mail the CD-ROM or diskette to the Perkins Loan Assignment Processing Center. Schools should include with the diskette or CD-ROM the original paper promissory note(s)for the loan(s) being assigned and the Institutional Certification page, signed by the appropriate institutional official. The school is still responsible for all information submitted using these media.
Upon assigning a loan to ED, the institution must update the status of the assigned loan with the national credit bureau(s) to which it had reported the loan. In most cases, this may be done either by withdrawing the account entirely from the credit bureau or requesting that the credit bureau recode the account to indicate that the loan is being assigned to ED (see Attachment 1, Page 8).
Institutions must have successfully reported the loan to the National Student Loan Data System (NSLDS) before the loan may be assigned. Before submitting a loan to ED for assignment, the institution must also update the NSLDS record, using a Loan Transfer Code of "AE", to reflect the assignment.
Please carefully read and follow the attached procedures. Loan assignments submissions not adhering to these procedures may be rejected.
Questions regarding assignment procedures should be directed to the offices listed in Section VI. ("Information Sources") of Attachment 1. Please do not contact the Assignment Processing Center. For information on the repayment status of past assignments, contact the appropriate ED Regional Office. All other questions on Perkins loan assignments should be directed to Federal Student Aid, Borrower Services, Collections Group at (202) 377-3373.
Institutions that will no longer be participating in the Federal Perkins Loan Program should direct questions on liquidation procedures to our Federal Student Aid Campus-Based Operations staff at 1 (877) 801-7168. Institutions that have closed or are in the process of closing should contact our Closed School Unit at (202) 377-4367.
Sincerely,
Tom Pestka, General Manager
Borrower Services
Federal Student Aid
Attachment 1 - Assignment Submission Procedures
Attachment 2 - Perkins Assignment Form Instructions
Attachment 3 - Assignment Form: Institutional Certification
Attachment 4 - Assignment Form: Borrower and Loan Information
[1] Unless specifically indicated otherwise, reference in this letter and in the attachments to 'Perkins Loans' refers to all three of the loan programs noted above.
Attachments/Enclosures: