Posted Date:April 19, 2013
| Author: | William Leith, Service Director, Program Management, Federal Student Aid |
Subject: Federal Perkins Loan Portfolio Liquidation and Assignment Procedures (Updated November 1, 2013)
Note: On November 1, 2013, we replaced two of the attachments to this announcement: the Federal Perkins Loan Liquidation Procedures and the Federal Perkins Loan Assignment Procedures. As explained in a September 6, 2013 announcement, we informed the community of our transition to a new servicer, ECSI Federal Perkins Loan Servicer and its impact to the assignment process for Federal Perkins Loans. The attachments have been updated to reflect the full transition of assignment processing and change of address to the new servicer. These updated attachments supersede those previously posted on September 27, 2013.
Note: On June 12, 2013 we replaced the Federal Perkins Loan Assignment Procedures attachment. On page 17 of the new attachment, we updated the mailing address and procedural information related to Total and Permanent Disability (TPD) Discharge assignments for Perkins Loans. For complete details about Perkins TPD assignments, refer to the June 12, 2013 Electronic Announcement.
Note: On May 3, 2013, we replaced two of the attachments to this announcement: the Institutional Certification page of the Perkins Loan Assignment Form and the Perkins Loan Assignment Form Instructions. In each document, we replaced one instance of the words "Serial Number" with "OPEID Number."
Additionally, we are providing Perkins Loan Assignment Form (OMB 1845-0048) implementation information:
The Office of Management and Budget (OMB) approved a revised version of the Perkins Loan Assignment Form under OMB Control No. 1845-0048. The new expiration date is 11/30/2015. The new version replaces the previous version with an expiration date of 08/31/2012. Note that while schools and third-party servicers may begin utilizing the attached OMB-approved form immediately, the Department of Education will continue to accept assignment forms with an expiration date of 08/31/2012 that were previously approved under OMB Control No. 1845-0048 through 08/31/2013.
This announcement and its attachments provide updated information about the required processes for the liquidation of a school's Federal Perkins Loan (Perkins Loan) portfolio and program fund when it ends its participation in the Perkins Loan Program. It also provides updated procedures to be used when a school assigns Perkins Loans to the Department of Education (the Department) for any reason.
Changes have been made to both the Perkins Loan liquidation procedures and assignment procedures. In most cases, the changes to the Perkins Loan written procedures further clarify the process or provide additional detail. In some instances we have changed what is required of schools for the purposes of liquidating and assigning loans to the Department. The information in this announcement and its attachments replaces the guidance last posted in an October 5, 2012 Electronic Announcement.
Perkins Loan Liquidation
A school must liquidate its Perkins Loan Revolving Fund and its Perkins Loan Portfolio, when the school:
voluntarily withdraws from the Perkins Loan Program;
has had its eligibility to participate in the Perkins Loan Program terminated by the Department;
has not been approved by the Department for continued participation in the Perkins Loan Program during the school's recertification process; or
is closing.
A school is urged to liquidate its Perkins Loan Revolving Fund and its Perkins Loan Portfolio if it is no longer advancing Perkins Loan funds to students.
The process of liquidating a school's Perkins Loan portfolio includes a review of the outstanding Perkins Loans to determine if the loans have been maintained and administered properly so they can be assigned to the Department. This process also includes liquidating the funds in the Perkins Loan portfolio and accounting for any Perkins Loans that could not be assigned to the Department. A school's Perkins Loan portfolio is not considered liquidated until an official letter of completion has been received from the Department.
Points to Remember When a School is Liquidating its Perkins Loan Portfolio
Notify the Federal Perkins Loan Program Liquidation Team that your school is beginning the liquidation process. Please see the attached Federal Perkins Loan Liquidation Procedures for details.
After notifying the Department of your school's intent to liquidate and discontinue participation in the Perkins Loan Program, the school must begin the assignment process. Please read the attached Assignment Procedures carefully. A school must divide and clearly mark the non-defaulted Perkins, NDSL and Defense Loans into the following borrower categories: grace period, forbearance, deferment, enrolled and in attendance at a school at the time of liquidation, or in repayment. Note that for any of these types of non-defaulted loan categories, there should not be a default date included on the assignment form.
Using Departmental student data and FISAP data, the Department will work with a school to reconcile any discrepancies between what it reports and what we have on file. However the school is responsible for reconciling its information with the information maintained by the Department. Ultimately, the total amount of loans and number of borrowers we have in our records must match what is reported by the school on its final FISAP.
Also note that if a school received notification that a bankruptcy petition has been filed prior to the time that it submits the loan to the Department, the loan assignment will be rejected by the Department. For the purposes of liquidation, the school should separate and clearly mark these loans to avoid automatic rejection. The same is true for any loans that would fall under the category of potential death, non-resolved. The processing center must handle these two categories differently. The loans must be separated from the other submission categories.
Changes to the Liquidation Procedures
Information has been added to remind schools that are liquidating their Federal Perkins Loan account and closing out their participation in the Federal Perkins Loan Program must account for the program funds as outlined under the Audit Requirements—Step 3 in the attached liquidation procedures. Schools that qualify and report annually under the Single Audit Act, commonly referred to as the OMB A-133 audit, should consult with their auditor and contact the FSA's School Participation Team to discuss how the close-out reporting will be done.
Assignment of Perkins Loans to the Department
A school assigns Perkins Loans to the Department following the guidance and procedures included in the attachment titled "Federal Perkins Loan Assignment Procedures." Perkins Loans must be assigned to the Department:
after due diligence has not resolved the default;
when a determination has been made that the borrower is eligible for a total and permanent disability discharge; or
when a school is liquidating its Perkins Loan portfolio.
Changes to the Assignment Procedures
We made two significant changes to prior Perkins Loan assignment procedures. The Perkins Loan assignment procedures now require schools to provide:
complete repayment histories for all Perkins Loan assignments, and
disbursement records for assignments of loans made using Master Promissory Notes for schools closing or liquidating and discontinuing participation in the program.
Perkins Loan Assignment Form
The Office of Management and Budget (OMB) has approved a revised version of the Perkins Assignment Form under OMB Control No. 1845-0048. The new expiration date is 11/30/2015. The new version replaces the previous version with an expiration date of 08/31/2012.
The only substantive change to the previous version of the form is that a school is now required to complete Section E. – Cancellation Information if the borrower has received a cancellation on his or her Perkins Loan.
Contact Information
If you have specific questions pertaining to the procedures for assignment of accounts to the Department or pertaining to the status of your assignment submissions if it has been more than 60 days; or if you have questions pertaining to the correction of rejected submissions, you can contact the Perkins Loan Assignments Processing Division at 415/486-5655 or by e-mailing PerkinsLoanAssignments@ed.gov. If you contact the Processing Division at the above number, be advised that you will be instructed to leave a detailed message regarding your assignment submission. Due to periods of high call volume, contacting the Processing Division via PerkinsLoanAssignments@ed.gov may expedite a faster response. Be sure to safeguard any student borrower information when sending files by encrypting the file prior to attaching and sending.
If you have questions about the information provided in this letter and its attachments, contact the Campus-Based Call Center at 877/801-7168. Customer service representatives are available Monday through Friday from 8:00 am until 8:00 pm (ET). You may also e-mail CBFOB@ED.GOV.
Federal Perkins Loan Liquidation: Procedures and Instructions
Federal Perkins Loan Assignment: Procedures, Instructions, and Forms