Publication Date: May 2004
DCL ID: CB-04-07
Federal Perkins Loan Service Cancellation Reimbursement
Posted on 05-10-2004
May 2004
CB-04-07
SUBJECT: Federal Perkins Loan Service Cancellation Reimbursement
SUMMARY: This letter pertains to the 2002-2003 Federal Perkins Loan Service Cancellation Reimbursement and Payment Letter
REFERENCE: Volume 5 of the 2003-2004 Federal Student Aid Handbook
Dear Partner:
This letter contains a series of questions and answers relating to the Payment Letter and Worksheet for reimbursement to participating schools of service cancellations in the Federal Perkins Loan (Perkins Loan) Program. Under certain conditions, a Perkins Loan borrower may have all or part of his or her loan canceled for engaging in teaching, military service, law enforcement or corrections officer service, service as a nurse or medical technician, Head Start service, service to certain types of high-risk children, and voluntary service.
Questions and Answers
Q1 When will you issue the service cancellation reimbursement?
A1 We will issue your payment in June 2004 by electronic funds transfer (EFT) to the bank account your school designated.
Q2 Will I be able to find my service cancellation Payment Letter and Worksheet on the web?
A2 Approximately two weeks before we send your payment, we will post your Payment Letter and Worksheet to the campus-based web site. You will be able to view and print the documents by logging on to the campus-based web site at http://www.cbfisap.ed.gov. Select the eCB "Self-Service" link from the top navigation bar and you will have direct access to your service cancellation Payment Letter and Worksheet in the Campus-Based Notification section.
Q3 How did you calculate the amount for service cancellation reimbursement?
A3 There are two categories of reimbursements under the Perkins Loan Program. The first category represents a school's portion of principal and interest canceled on loans made prior to July 1, 1972 for the National Defense Student Loan (Defense Loan) Program. This portion is calculated using a percentage figure that was locked in for each school a number of years ago. While the number varies slightly from school to school, it is approximately 10% for each school that canceled loans in this category.
The second category represents reimbursement of both the federal and school portions of principal and interest canceled on loans made on or after July 1, 1972. For the National Direct Student Loan (NDSL) and the Perkins Loan programs, schools are entitled to reimbursement of the total amount canceled. Both reimbursement calculations are based on information contained in your 2002-2003 Fiscal Operations Report (Part III, Section A, field 27 for the Defense Loan program and fields 28 through 34 for the NDSL and Perkins Loan programs) and edit corrections. Your Payment Letter and Worksheet reflects the calculation amounts for each category.
Q4 Will I receive the full amount to which I am entitled this year?
A4 You will receive all of any Defense Loan payments to which you are entitled. However, due to insufficient funds in the Fiscal Year 2004 appropriation, you will receive less than 100 percent of the reimbursement due you this year for the NDSL and Perkins programs. The Department will maintain a record of the amount owed to you and will include it in the calculation for next year.
Q5 Will I receive one or two EFT payments for the two reimbursement categories?
A5 You will receive one EFT payment for both categories of service cancellation reimbursements. Your scheduled payment will automatically be deposited in your existing account from the Department of Education Grant Administration and Payment System (GAPS).
Q6 What must I do with the cancellation reimbursement funds sent to my school?
A6 The portion of your reimbursement that represents cancellations of Defense Loans (Line 8 of the Payment Letter and Worksheet) belongs to your school and may be used for any purpose. The portion of your reimbursement that represents NDSL and Perkins Loan cancellations (Line 19 of the Payment Letter and Worksheet) must be deposited into your school's Perkins Loan Fund and can only be used for advances to borrowers and for other allowable uses.
Q7 What portion of the service cancellation reimbursement do I report on the FISAP?
A7 The portion of the reimbursement that represents principal and interest canceled for Defense Loans (Line 8 of the Payment Letter and Worksheet) should not be reported on the FISAP, unless you decide to contribute it to the Perkins Loan Fund. If you do, you should report the contribution as additional Institutional Capital Contribution in Part III, Section A, field 21 of your Fiscal Operations Report for the award period ending June 30, 2004, to be submitted by October 1, 2004.
Reimbursement for canceled NDSL and Perkins Loans (Line 19 of the Payment Letter and Worksheet) must be included in Part III, Section A, field 25 of your Fiscal Operations Report.
Q8 What do I do if either of the amounts calculated is negative, but the net amount is positive?
A8 This question pertains only to those schools that have reported cancellations in both the Defense and NDSL/Perkins categories of repayment and are receiving a payment in 2004. However, one of the two categories is a negative amount. A negative amount in either of the reimbursement categories indicates that a prior year reimbursement to your school was incorrect as a result of erroneous information contained in a previous Fiscal Operations Report or an error in the campus-based database at the time of the reimbursement. The amount of the overpayment has been deducted from the total 2002-2003 Federal Perkins Loan service cancellation reimbursement.
If the overpayment occurred under the first reimbursement category (Defense Loans), you must now deposit into the Loan Fund from school funds an amount equal to the overpayment, so that the Loan Fund receives the full amount of its NDSL/Perkins payment. This deposit must be shown as an increase in the cash on hand to be reported in Part III, Section A, field 1.1 and in the cumulative amount of NDSL and Perkins Loan reimbursements to be reported in field 25 of the Fiscal Operations Report for the current award year that ends June 30, 2004.
If the overpayment occurred under the second reimbursement category (NDSL and Perkins Loans), you may withdraw from the Perkins Loan Fund an amount equal to the overpayment in order that the school may receive the full reimbursement due on its share of Defense Loan cancellations. This withdrawal will result in a decrease in the cash on hand to be reported in Part III, Section A, field 1.1 and in the cumulative amount of NDSL and Perkins Loan reimbursement to be reported in field 25 of the Fiscal Operations Report for the current award year that ends June 30, 2004.
Q9 Who do I contact if I have questions?
A9 Federal Perkins Loan Service Cancellation questions should be directed to the Campus-Based Call Center at (877) 801-7168.
Sincerely,
Richard Coppage, Director
Campus-Based Operations Branch