This announcement is a follow-up to the Aug. 27, 2021 Electronic Announcement (EA ID: General 21-53) announcing that all institutions are required to assign to the U.S. Department of Education (the Department) loans made under the Federal Perkins Loan (Perkins Loan) Program that have been in default for more than two years; and to the May 4, 2022 Electronic Announcement (EA ID: CB-22-10) that extended the deadline for assigning these loans to June 30, 2023.
Please note that there has been no change to the conditions or to the deadline of June 30, 2023 for assigning Perkins Loans that have been in default for more than 2 years.
If your institution still holds any Perkins Loans that have been in default for more than 2 years and there are no current collections or collection records for these loans, please submit the loans for assignment as soon as possible to allow time for processing.
Institutions with an acceptable collection record on defaulted Perkins loans are not required to assign those loans to the Department. However, institutions should notify the Department that documentation showing an acceptable collection record is available upon request and submit such documentation to the Department of Education for review if and when requested.
In the upcoming weeks, the Department will review all active Perkins loan assignment activity. If it is determined that an institution has shown insufficient effort assigning, purchasing, or providing acceptable collection records to the Department for review, a warning letter may be sent to the institution’s financial aid office as well as to the campus CEO/President reminding them of the requirement to take action on these loans by the June 30, 2023 deadline.
Continued failure to assign these loans could result in a focused program review to assess the institution’s reasons for non-compliance with a mandate set by the Secretary and a school’s Title IV administrative capability. However, if your institution is facing specific challenges in meeting this deadline, you can reach out to FSA to discuss an appropriate timeline to assign these loans.
If you do not have the required promissory note needed to assign a loan(s), the loan(s) may still be assignable if you have other documentation that substantiates the loan and demonstrates that the borrower acknowledged the debt. If you do have such documentation, please follow the instructions provided in Part I of the Assignment and Liquidation Guide in the section called, What to do if you have missing or defective documentation or other extenuating circumstances and submit the loan for assignment.
If you do not have the required promissory note or any alternate documentation that can be used to assign the loan(s), the school must purchase the loan.
Tip: Do not put off determining if you have documentation needed to assign your loans! Because the loan continues to accrue interest that the school incurs when purchasing a loan, it is in the school’s best interest to act quickly to determine if it has any open loans that cannot be assigned due to a lack of documentation.
To purchase a loan, a school deposits into its Perkins Fund the total amount due on the loan (outstanding principal plus outstanding interest). Funds are not sent to the Department to purchase loans. The cash that a school deposits into its Perkins Fund to purchase a loan remains in the Perkins Fund until the end of the calendar year when we run the distribution of assets process. At that time, the federal government and the school will both recoup their share of the Fund cash.
Schools that purchase loans must be certain to report the purchase correctly on the FISAP and must be sure to update the loans accurately in NSLDS. Please see the Assignment and Liquidation Guide for complete information regarding reporting purchased loans.
Please refer to the Aug. 27, 2021 Electronic Announcement (EA ID: General 21-53) for complete information and conditions.
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.