Under Section 466(b), of the Higher Education Act of 1965, as amended (HEA), beginning with the 2019–20 award year and for all subsequent award years, the Department of Education (the Department) will require a capital distribution from the institution’s Perkins Loan Revolving Fund (Perkins Fund) on an annual basis for institutions that continue participating in the Federal Perkins Loan Program. The Distribution of Assets from the Perkins Fund is part of the wind-down of the Federal Perkins Loan Program.
Institutions should NOT remove and return any funds to the Department or the institution until the institution has been notified to do so.
The 2019–20 Distribution of Assets Notification Process
After the Fiscal Operations Report and Application to Participate (FISAP) is submitted through the Common Origination and Disbursement (COD) System by October 1, 2019, the Department will notify institutions that have cash in the institution’s Perkins Fund subject to the distribution of assets process. The deadline by which all funds, both the federal and institutional shares, must be removed and returned to the Department and to the institution, respectively, is February 17, 2020. Only the federal share the Department requests to be returned should be remitted through G5 by the deadline.
Reimbursement for Perkins Loan Service Cancellations
The Department will also notify institutions of the amount of partial reimbursement for Perkins Loan service cancellations the institution must remove from the Perkins Fund and return to the institution prior to February 17, 2020.
Distribution of Assets and Reimbursement for Perkins Loan Service Cancellation Calculations
Determination of an institution’s Distribution of Assets uses the Proportional Share formula and information from the institution’s most recently submitted FISAP. The calculation accommodates both the changes in the Institutional Capital Contribution (ICC) matching requirements that have occurred over time and any overmatching of funds by the institution. The calculation also takes into consideration any Federal Capital Contribution (FCC) that had been previously returned by the institution to the Department and any ICC that was previously repaid to the institution from the Perkins Fund. If your institution determines that any of the items used in the calculation was misreported on your submitted FISAP, corrections should be made prior to the December 13, 2019 corrections deadline.
Determination of the institution’s amount of partial service cancellation reimbursement uses 2017–18 cancellation data as reported on the previously submitted (October 1, 2018) FISAP. This process takes into consideration any prior reimbursement for service cancellations.
Cash on Hand in the Perkins Fund (FISAP, Part III, Sec A, Line 1.1)
Proportional Share Percentage is calculated using the following FISAP data:
Total Net Federal Capital Contribution is the total FCC (FISAP, Part III, Sec A, Line 27) minus Repayments of FCC to the Department (FISAP, Part III, Sec A, Line 28)
Total Net Institutional Capital Contribution is the total ICC (FISAP, Part III, Sec A, Line 29.3) minus Repayments of ICC to the institution (FISAP, Part III, Sec A, Line 30.3)
Federal Share Percentage is the total Net FCC divided by the sum of the total Net FCC plus total Net ICC
Institutional Share Percentage is the total Net ICC divided by the sum of the total Net FCC plus total Net ICC
Institutional Share to Be Returned to the institution is the total Cash on Hand multiplied by the Institutional Share Percentage
Partial Reimbursement for Service Loan Cancellation is the amount determined by the Department using the institution’s 2017–18 cancellations data as reported on the FISAP submitted on October 1, 2018
Federal Share to be Returned to the Department is the total Cash on Hand, minus the institutional share owed, minus the amount of partial service cancellation reimbursement determined by the Department
Institutions are only permitted to charge to the Perkins Fund allowable costs incurred in collection of the principal and interest on loans not already reimbursed from the Perkins Fund or from payments by the borrower. You may refer to 34 CFR 674.47(e) for the limitations on costs charged to the Fund.
If you have questions about the information in this announcement, contact the COD School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.