cb98-13aex1.pdf  PDF
September 1998

Federal Perkins Loan Program (Formerly National Direct/Defense Student Loan Programs) Assignment Submission Procedures for Schools with Cohort Default Rates of 19 Percent and Lower As of June 30, 1993

I. SUBMISSION PERIOD DEADLINE

Postsecondary institutions may submit such assignment packages at any time during the program year (for example, July 1, 1997 - June 30, 1998). All assignment submissions or resubmissions posted between June 21 and June 30 of a particular program year must bear a certification date of July 1 of the following program year and report interest due through that date.

II. REQUIRED SUBMISSION DOCUMENTATION

A. Summary Listing of Required Documentation

All documentation listed below and summarized in Section II-B, subsections 1 through 11, is required of all institutions, regardless of their default rate and regardless of the loan or default time frame, unless otherwise indicated.

1. Submission Package Manifest;

2. ED Form 553 (Expiration Date: 05/31/2001);

3. Photocopy of Completed ED Form 553;

4. Original Promissory Note(s);

5. Signed (If Available) Repayment Schedule;

6. Complete Repayment History (If Applicable);

7. Acceleration Notice;

8. Judgment Information (If Applicable);

9. Bankruptcy Information (If Applicable);

10. Documentation of Recall (From Collection Agencies,
Credit Bureaus, etc.);

11. Copies of Approved Cancellation and Deferment
Documentation (If applicable).

If a borrower has more than one loan, and these loans are being submitted separately, each submission must contain copies of the required documentation. Similarly, documentation that addresses the accounts of several borrowers, such as recall documentation, must be copied and included with each loan. One copy of such documentation per manifest is not sufficient.

Please indicate, at the top of each document, which of the requirements each piece of documentation satisfies (e.g., submission package manifest, repayment history, acceleration notice, etc.) and highlight key phrases, entries, etc. that demonstrate the documentation's fulfillment of the requirements or that support statements on the ED Form 553. This will expedite the review process and reduce the number of rejected accounts.

If there are certain items in your submission documentation that need clarification or justification (for example, your institution has made a disbursement after the departure date), you should include a statement on institutional letterhead explaining the circumstances.
This statement must be signed by the same authorizing official who signs the ED Form 553, except as noted in Section II.B.8 "Judgment Information," and should accompany each account submission to which the statement is applicable. Explanations concerning certain documentation, as noted throughout these procedures, may require formal approval by the appropriate ED official, as noted in Section VI "Information Sources".

B. Description of Required Documentation

1. Submission Package Manifest

Each package of accounts submitted for assignment must include a manifest (list) showing the following formatted information:


Total
Amount
Outstanding
Borrower's Name and Type of Interest Rate (ED Form 553
Social Security No. Loan on the Loan Item #65)

Type of loan must indicate E (Defense), I (Direct) or P (Federal Perkins).

Loans of different types and interest rates are to be treated as separate loans and are therefore to be listed separately.

The manifest must be typed on institution letterhead and include only the information listed above. Do not include this information as part of a cover letter.

If a manifest is included that is not consistent with the contents found in the package, your institution will be so notified, but processing of your institution's submissions will continue unless you notify ED with any concerns about the discrepancy.

A revised manifest must be included with all resubmissions.

2. ED Form 553

The approved ED Form 553, or an approved facsimile, bearing an expiration date of August 31, 2001, must be used through that date. These forms may be photocopied. Assignments using any form other than the approved ED Form 553, or an approved facsimile, will be rejected. The submitted ED Form 553 must provide all required information and bear an original signature of the institution official authorized to transfer assets. A signature stamp may be used where volume dictates (25 accounts or more).

If an institution chooses to use a computerized facsimile of the ED Form 553, it must have written approval from the appropriate ED official cited in Section VI "Information Sources" of these procedures. This written approval must now be renewed every year that these procedures are released, regardless of whether any revisions have been made by ED to its Form 553. Due to established review procedures, all facsimiles must be structured as nearly identical to the format of the ED Form 553 as possible. All facsimiles must:

a) be vertical in format;

b) be no more than two [2] pages in length;

c) have each data item "blocked" and in the identical layout; and

d) include the specific language of the ED Form 553, including the OMB burden of work estimate, the declaration of assignment, and all item numbers and descriptions. In addition, all facsimiles will be reviewed for legible printing. Facsimiles that cannot be easily read due to tight spacing or blurring will be rejected.

Be sure to respond to all items on the ED Form 553. General instructions (Exhibit 5) and detailed instructions (Exhibit 6) are included to assist you. The following clarify and explain common errors that cause ED Forms 553 to be rejected.


a) Items 2, 3, 4, and 7 must reflect the address (including city, state and zip code) of the institution submitting the assignment. In no case should the address appearing in these item fields be that of a servicer.

b) Item 9 ("Certification Date") is the date on which the ED Form 553 is signed by the institution official authorized to release assets. However, submissions that are mailed between June 21 and June 30 of a particular program year must bear a postdated certification date of July 1. The account must accrue interest up to and including the certification date.

c) Item 16 ("Social Security Number") must be included for each account that is being submitted. ED will not accept for assignment, for any reason, an account that does not bear a valid SSN.

d) Item 39 ("Date of Last Advance") must be prior to Item 18 ("Departure Date") unless an explanation is attached detailing why it is not. The appropriate ED official cited in Section VI "Information Sources" must approve all such explanations for assignment submission.

e) Item 40 ("Date Last Grace Period Ended") must show that the full 9- or 6-month grace period ran after Item 18 ("Departure Date").

f) Item 41 ("Date of Default") is the day following the day on which payment was due but not received. This date no longer has to be two years prior to the certification date. However, all due diligence requirements must be performed before the account can be assigned. In such cases where the borrower was eligible to be entered as in default but thereafter made a few payments according to satisfactory arrangements, the date of default becomes the day following the day on which the first rescheduled payment was due. Documentation of this forbearance of the original scheduled repayment date must be submitted. In such cases where the borrower made sporadic gratuitous payments following his default date that were not in compliance with any arrangement, due diligence should have continued and the date of default stays the same.

g) An account may not be assigned if Item 65 ("Total Amount Outstanding") is less than $25, unless the borrower has more than one loan (Direct, Defense, Federal Perkins) which, when combined, total $25 or more. The following are special instructions for assigning loans less than $25 each, but which, when combined, equal at least $25:

1) Complete ED Form 553 for each loan;

2) Package all loans for each borrower together; and

3) Include a cover letter explaining the loan
combination.

h) Items 66-104 (Cancellation and Deferment Information)
must agree with the corresponding information in the
documentation provided with the assignment, such as
dates, type, etc. (It is understood that dates may not
match exactly on accounts from institutions with
quarterly or other billing cycles.)

i) If an account is rejected due to a problem with any of the dates appearing on the ED Form 553, the institution should ensure that all correlating dates are correct before resubmitting the account. For example, if the institution corrects Item 40 "Date Last Grace Period Ended," the institution should ensure that Item 41 "Date of Default" is still correct.

j) If an account is rejected and the institution wishes to resubmit that account, corrections can be made directly to the returned ED Form 553 as well as to the photocopy of the form. Corrections should be made using blue or black ink. (Do NOT USE RED INK). Each change must bear the initials of the staff member making the change. Corrections must be clear and legible. If the account is resubmitted more than 45 days after its date of return to the school, the certification date and interest due must be changed.

k) For items on the ED Form 553 that require a date, the order in which it must be given is month/day/century-year (MM/DD/CCYY). If you are unsure of the exact day of the month, use the 15th day.

3. One Photocopy of the Completed ED Form 553

The photocopy must also include an original signature or, if applicable, original signature stamp.

4. The Original Promissory Note

All promissory notes that are submitted for assignment must be valid legal instruments. At some institutions, audits and program reviews might already have identified defective or invalid notes for resolution. You may not assign these notes until these defects have been corrected. All promissory notes must contain signatures, amounts, and dates for each disbursement.

If the original promissory note is no longer available and only a certified photocopy exists, the photocopy (front and back) may be submitted with the following statement, signed by the appropriate institutional official, appearing on the photocopy:

"Certified True Copy"

I declare under penalty of perjury that the foregoing is a true and correct copy of the original promissory note.

Signature:
Title :
Date :

In addition, the institution must provide a statement noting why the original note is unavailable, that it has not been previously assigned to the U.S. Government, and that it has not been returned to the borrower.

If neither the original nor a photocopy of the promissory note is available, the loan may still be assigned if the institution submits copies (front and back) of the signed checks or disbursement vouchers, or submits an original affirmative legal judgment with the appropriate transfer statement (see Section II.B.10 "Original Judgment").

Copies of disbursement checks or vouchers may also be submitted as to documentation of unsigned advances on a promissory note. Partial assignment of a note may be made by including a cover letter noting that assignment is being made of only the valid advances and by preparing the ED Form 553 to reflect this.

Perkins Loan notes are to be used for borrowers who had no previous outstanding National Direct Student Loan (NDSL) balances and received first-time loans as of July 1, 1987. Borrowers who received loans on or after July 1, 1987 and who had outstanding balances from previous NDSLs should have received "Direct" Loan notes. NDSL and Direct Loan notes may be submitted separately for the same borrower, but with the "Direct" note indicated as a "Perkins" loan on the ED form 553. However, by having the same interest rate and grace period as the NDSLs, ED will process them as NDSLs.

If you have a National Defense Student Loan and a National Direct Student Loan on the same promissory note, or the promissory note includes more than one interest rate for the same borrower, or different individuals co-signed parts of the same promissory note,they must be treated as separate loans even though the loans are on the same promissory note. In this situation, you should make a certified true copy of the original promissory note (as previously instructed) and include the original promissory note with one loan and the certified true copy with the other loan(s). Attach a statement with the copy indicating that the original promissory note is with one of the borrower's other loans. (Please specify Federal Perkins, Direct, Defense, or percentage rate.) A separate ED Form 553 along with supporting documentation must be completed for each note with different provisions.

Any assignment where one promissory note represents two loans for any other reason will not be accepted without the approval of the appropriate ED official (see Section VI "Information Sources").

5. Signed (if Available) Repayment Schedule

National Direct (or Defense) Student Loan (NDSL)/ Federal Perkins Loan Program Regulations, Section 674.42, require an institution to retain a copy of the borrower's repayment schedule. The repayment schedule should have been calculated on the total amount of the loan and should include the date the first installment payment was due, plus the number, amount, and frequency of each required payment. This schedule must be included in each assignment submission.

If this document is not signed but three or more repayments have been made according to schedule, the unsigned repayment schedule may be assigned.

If this document is not signed and fewer than three repayments have been made, a statement indicating why it was not signed must be added to the repayment schedule (for example, mailed, but not returned with signature).

If this document is not available at all, you must provide a statement as to why no copy of the repayment schedule is available for submission. The appropriate ED official cited in Section VI-A "Information Sources" must approve all such statements.

6. Complete Repayment History (if applicable)

A copy of the student's loan repayment history (financial profile of the account) must be provided listing all payments made, on a payment-by-payment basis, and how individual payments were applied (such as what portion of the payment was applied to principal and what portion was applied to interest, etc.). Each payment history must also include total amounts for each of these areas of payment application. If the school provides no payment history, an explanation must be provided to ED indicating why there’s no payment history. (See VI Information Sources).

A key that would help to interpret the repayment history should be provided and attached to any printout. Such a key should assist in the interpretation of every accounting transaction that appears on the repayment history, regardless of its amount. One copy will suffice for each manifest. If repayment history transaction codes or amounts cannot be deciphered, all associated accounts will be rejected.

All institutions must now also specify, either as part of the key or in a separate signed statement, each collection cost charge made to the borrower as being from a billing service, skip-tracing service, collection agency, legal service, etc. Flat fees or account-percentages paid to billing and/or collection agencies from which costs have been assessed against an account, and an explanation of how the account-level charges were derived, must now be reported in a separate written statement.
Since standard procedure is to first deduct collection costs in situations of default, no account will be accepted for assignment in which collection costs represent the majority of the outstanding balance, unless the explanation for such situation is approved by the appropriate ED official (see Section VI "Information Sources").

If your institution employs a servicer that only provides a cumulative figure for payments received, or if your institution has changed servicers and no detailed report was provided by the former servicer at the time of the change, your institution must either:

a) Request a breakdown of the payments (what portion of
each payment was applied to principal and what
portion of each payment was applied to
interest)(NOTE: Cumulative totals are acceptable
without special ED approval if these totals were
generated as a result of the institutions converting
to computer automation; or

b) Perform its own calculation of how the payments were
applied before submitting the loan for assignment.

If either of these steps is not taken, the account will be rejected. As this requirement has been a part of the assignment procedures since 1987, there will be no exemption from this requirement under any circumstances for an institution that contracted with a new servicer within this period but failed to procure detailed repayment histories from its former servicer at the time of its contract termination.

If a borrower has a Direct loan and a Defense loan, payments received from that borrower should be prorated and applied accordingly. For example, a borrower has a Defense loan for $500 and a Direct loan for $1,000. A $30 payment was received. Of that payment, $10 dollars would be applied to the Defense loan and $20 would be applied to the Direct loan.

7. Acceleration Notice

Prior to submitting an account for assignment, the entire outstanding balance must be accelerated, or the loan must have matured (became due-in-full because the entire period for repayment of the loan has elapsed). By accelerating the loan, the institution demands immediate repayment of the entire unpaid indebtedness (total outstanding principal, accrued interest, and any applicable penalty/late charges or collection costs) even though the entire repayment period has not elapsed, because the borrower has failed to keep his account current or to file deferment or cancellation forms.

If the loan was accelerated, check "Yes" in Item 42 on the ED Form 553 ("Was this loan accelerated?"), provide a copy of the actual acceleration letter, or a computer generated breakdown of the school’s activities, and provide the date of acceleration in Item 44. Do not indicate "See Attached Letter." In the event that the loan did not need to be accelerated because it had matured, you should check "No" in Item 43, provide the date the loan became due-in-full in Item 44, and provide documentation supporting this claim such as by highlighting the final payment date on the repayment schedule and marking as "Maturity Date").

8. Judgment Information (If Applicable)

Federal Perkins Loan/NDSL Program regulations require an institution to sue a borrower or any endorser if other collection efforts have failed, unless one of the following conditions exist:

a) Borrower has no assets;

b) Borrower's address unknown;

c) Borrower incarcerated;

d) Borrower receiving public assistance;

e) Litigation in process and borrower skipped;

f) Unable to serve borrower with court papers; or

g) Expected cost of litigation exceeds the amount that
can be recovered from the borrower.

If your institution has initiated legal action on an account as part of its collection attempt, the account cannot be assigned to the U.S. Government until litigation is completed and a judgment is rendered for the institution and against the borrower or endorser.

ED does not accept assignment of notes for which the institution has obtained a judgment unless it transfers the original or certified true copy of the judgment to the U.S. Government with ED Form 553.

To make the judgment enforceable by the United States as assignee, some states require the institution as holder of the judgment to notify the court that rendered the judgment of the assignment; others have no such requirement. Again, your institution's attorney should contact the office of the court clerk to inquire about this matter, if the rule of your state is not known.

In addition, if the state the judgment was entered in does not require that the judgment be assigned through the court, the following sample statement should accompany the judgment in order to effect transfer:

All rights, title, and interest of the undersigned in this judgment are hereby assigned to the United States of America.

The school official authorized to release assets must sign this statement. The ED Form 553 does not suffice for the above statement. Because the manner in which judgments are assigned varies from state to state, you should consult your institution's attorney to determine the procedure and language for the jurisdiction in which the judgment was entered.


Any judgment that is included as part of an assignment submission must cite its interest rate and expiration date. In many states, judgment interest rates and expiration dates are set by state law and thus may not appear within the individual judgment. If the interest rate or expiration date does not appear within a judgment submitted by your institution as part of its assignment package for this or any other reason, this must be addressed in a separate statement signed by your institution's attorney. A copy of such statement must be provided with each account. If the judgment has expired, you should consult your institution's attorney about renewal of the judgment.

NOTE: PRIOR TO REPORTING JUDGMENT DATA ON THE ED FORM 553, YOU SHOULD PREPARE FOR YOURSELF A BREAKOUT OF PRINCIPAL, INTEREST, ETC., FROM ANY JUDGMENT THAT COMBINES THESE AMOUNTS, AS THEY WERE AT THE TIME OF YOUR PROCEEDINGS, AND THEN FOLLOW THESE REMAINING STEPS:

1) Enter the interest rate as assigned by the court into
Item #38 ("Applicable Interest Rate");

2) Enter all payments applied to principal (both before
and since the judgment) into Item #57 (Principal
Amount Due")

3) Enter all payments applied to collection costs
provided by the judgment into Item #60 ("Collection
Costs Repaid")

4) Enter all payments applied to interest (both before
the judgment at the interest rate of the note, and
since the judgment at the interest rate provided by
the judgment) into Item #61 ("Interest Repaid");

5) Enter any litigation or court costs, if awarded by
the court, and any amounts awarded by the court that
cannot be explained as representing principal,
interest, or collection costs, into Item #64
("Collection Costs/Penalty/Late Charges");

6) Enter any reductions made by the court to the
principal or interest sought to Item #57 (Principal
Repaid") or Item #61 ("Interest Repaid"), as
applicable.

If, for any reason, the amount that the court has awarded represents a reduction from the amount sought by the institution, and it is not clear whether that reduction is made from principal, interest, or collection costs, etc. THE ACCOUNT MAY NOT BE ASSIGNED. Any account for which Section D ("Loan Information: Financial") does not reconcile with the amount of any submitted judgment less any subsequent payments WILL BE REJECTED.



9. Bankruptcy Information (If Applicable)

If the institution has received notification that a bankruptcy petition has been filed prior to the time the institution submits the loan to ED, the account will be rejected.

If the court then rules in favor of the borrower and discharges the loan, the account then may be eligible to be written off the institution's records as a bankruptcy.

If the court rules against the borrower (or the loan is considered nondischargeable), the loan is then eligible for assignment to ED. All documentation supporting the court decision must be included with the assignment submission.

If you are unsure of the type of bankruptcy petition filed or the nondischargeability of the loan, you should consult your institution's attorney.

If the institution has received documentation that the bankruptcy petition has been dismissed, the account is eligible for assignment. All dismissal documents must be included with the assignment submission.

If the institution receives a petition for bankruptcy after ED has accepted the loan for assignment, that notice must be forwarded to the appropriate ED Regional Service Center (RSC) immediately. (See Section VI "Information Sources," for RCC addresses).

Section 523 (a) (8) of the Bankruptcy Reform Act of 1978 states that an educational loan made, insured, or guaranteed by a governmental unit cannot be discharged under Chapter 7 unless it meets one of the following criteria:

a) The loan first became due more than seven (7) years
before the date of the filing of the bankruptcy
petition (or more than five [5] years prior to
such filing if done before May 28, 1991); or

b) Exempting the debt from discharge would impose an
undue hardship on the debtor and debtor's dependents.

If a Chapter 7 bankruptcy notice of discharge is received and neither of the above criterions applies, the loan has not been discharged and is eligible for assignment.

If a Chapter 7 bankruptcy notice of discharge is received and the institution determines that criterion "a" applies, or the court determines that criterion "b" applies, the loan has been discharged and the account cannot be assigned. In cases of criteria "b", the discharge order must specifically state that the borrower's student loan exclusion under Section 523 (a) (8) is waived due to hardship.


A discharge in bankruptcy prevents further enforcement of the obligation against the borrower: any cosigner is still legally responsible for the debt. The institution must perform all due diligence requirements with respect to the cosigner prior to attempting assignment to ED.

ED will not accept assignment of an account after an institution receives notice that the debtor has filed a Chapter 13 (Wage-Earner Plan) petition. If the debtor fails to comply with the repayment terms after agreeing with the Chapter 13 plan, the institution is to notify the court for further action.

10. Documentation of Recall

All loans must be documented to have been recalled from any outside firms that the institution employed for billing, collection, litigation and credit bureau reporting at least 60 days prior to the certification date on ED Form 553. This must be done to assure ED that no enforcement is still being taken by the school on a loan being assigned to the U.S. Government.

When no responses have been obtained from such firms confirming recall of the account, a copy of the letter from the institution requesting such recall shall suffice.

All recall documentation must make reference to the specific loan(s) and the borrower's Social Security Number. Any recall documentation that addresses more than one borrower or loan must be copied and included with each loan with the applicable loan reference highlighted. This includes any list that might refer to several accounts and that might accompany a standard recall letter.

If the institution uses a computer tape to recall accounts from servicers, the institution still is responsible for providing hard-copy documentation of recall to ED when the accounts are assigned.

When withdrawing an account from a credit bureau, be sure that whatever code is requested for entry on the debtor's record is neither positive nor negative. In most cases, an institution has the option of either withdrawing an account entirely from a credit bureau or requesting that the credit bureau change its code to indicate that the account is being assigned to the U.S. Government. In the latter case, contact your credit bureau to determine which code your institution should use to reflect assignment.

NOTE: All institutions have been required to report all accounts on which advances have been made on or since July 23, 1992, to NATIONAL credit bureaus. Reporting of accounts to regional credit bureaus is no longer sufficient for such accounts.

11. Copies of Approved Cancellation and Deferment Documentation

Copies of all cancellation and deferment requests approved by your institution (as listed under Section E of ED Form 553) must be provided in the submission package. If approved documentation is not available, but cancellation and/or deferment was granted, you must provide a detailed explanation as to why the approved documentation is not available or the account will be rejected. Such explanation should address the dates of the deferment/cancellation.

All dates and financial information from deferment documentation must be cited in the appropriate fields of the ED Form 553. In the event that such information is not reconcilable with the ED Form 553, the account will be rejected.

12. Due Diligence Documentation

As the result of your institution having a cohort default rate below 20% as of June 30, 1992, you are not required to submit documentation of due diligence activities listed in Exhibit 1 of this document.

III. MAILING DIRECTIONS

A. Accounts submitted for assignment are to be mailed to
the following address:

U.S. Department of Education
Perkins Loan (NDSL) Assignment Processing Center
P. O. Box 4136
Greenville, Texas 75403-4136

Do not contact this address in writing or by telephone to inquire about the status of assignments or to clarify why assignments are rejected (See Section VI "Information Sources").

B. Delivery of assignment submissions can only be made to the listed Post Office Box. Commercial carriers (such as Federal Express, UPS, etc.) will not be able to deliver to this Post Office Box. Therefore, we suggest that you mail accounts through the U.S. Postal Service, "Return Receipt Requested". Assignments mailed to ED Regional Offices or to ED Central Office in Washington, D.C. will be returned to the institution.

IV. ASSIGNMENT PROCESSING STEPS

ED assignment processing steps are performed by a contractor currently located in Greenville, Texas. This is only a processing center.
All inquiries about assignment status or reasons for rejection should be made to the Washington address and telephone numbers in Section VI "Information Sources". Institutions wishing to confirm paid-in-full status for debtors requesting transcripts should contact the appropriate regional office in Section VI "Information Sources".

Once the submission package is received in Greenville, Texas, a manual count of loans is taken and compared to the institution's manifest. If a submission package manifest is not included, no review of the enclosed submissions is conducted as they are automatically rejected. If there is a difference between the number of loans included in a submission package and the number of loans reported on the package manifest, a letter is sent to the institution acknowledging the actual number of loans received and identifying the loans in dispute (see Exhibit 2). Any loans not reported on the manifest are also automatically rejected, while the reported loans continue in the review process unless ED is asked by the school to stop due to the discrepancy letter.

The accounts are then individually reviewed for compliance with due diligence requirements and procedures. When the accounts have been manually reviewed, all data items are keyed to ED's collection receivables system and reviewed, per established edit checks, for compliance.

If the due diligence requirements are not met, and/or any data elements fail to meet the edit requirements, the account are rejected and the entire file returned to the school by guaranteed mail with a correction worksheet (Exhibit 3) stating the reason(s) for rejection. (Refer to Section V-B "General Information" for specific resubmission instructions.)

If all established edit criteria are met and the accounts are accepted, your institution will receive a document identified as "Report NCLM710B" (see Exhibit 4). This report lists the following:

a) Department of Education Loan ID Number;

b) Borrower’s Name;

c) Borrower’s Social Security Number;

d) Principal Outstanding;

e) Interest Outstanding;

f) Total Outstanding Principal and Interest for each Account;

g) Institution’s Campus Based Program Serial Number;

h) Institution’s Name;

i) Report Run-Date (Acceptance Date); and

j) Total outstanding dollar amount for all accounts listed.

This is the official acceptance notice and is to be retained for your institution's records. As acceptance notices are sent to the institution address provided in your program participation agreement, we strongly urge that your institution's mail-distribution staff become familiar with these notices and the offices to where they should be distributed. If you wish such notices to be sent to a different address, you must contact the ED Institutional Participation Division at (202) 205-0183 to revise your institution's participation agreement. It is the institution's responsibility to ensure that its loan servicer receives its copies of such acceptance notices.


V. GENERAL INFORMATION

A. Cure Process for Assigning Defaulted Loans

If your institution now holds defaulted loans for which mandatory due diligence actions were not performed in a timely manner in prior years, the "cure" process, which will enable you to assign these loans, will operate as
follows:

1. The institution must locate the borrower. This is
proven by one of the following:

a) Postal receipt signed by the borrower;

b) Documentation of conversation that includes the
borrower's current address; or

c) Documentation from an address-search servicer
(non-IRS)that includes the borrower's current
address.

NOTE: If the institution cannot locate the
borrower,evidence of address search attempts will
suffice.

2.The institution must send the borrower a letter
informing him of his loan's default status which must
be resolved.

3.The institution must send the borrower a copy of his
signed promissory note along with a new repayment
schedule to be signed and returned.

4.If there is no response to these communications, the
institution must initiate collection procedures
including over-due notices, account acceleration,
collection agency referral, credit-bureau
notification, litigation (if applicable), and recall.

5.The institution must provide documentation that steps
1 through 4 above have been completed. The institution
must label this documentation as "Due Diligence Using
Cure Process".

6.The institution must label each completed ED Form 553
as"Cure Process Submission" in large print at the top
of the form. It should be understood that the cure
process is equivalent to reworking the loan and, with
the exception of the letters sent during the grace
period, does not absolve institutions from repeating
those due diligence actions it cannot document.

B. Resubmission Procedures

A submission package manifest must be included with each
resubmission package.

Corrections or changes may be made directly on both the original ED Form 553 and the copy of ED Form 553 or you may prepare a new form. If you prepare a new ED Form 553 rather than correct the previously submitted form, do not resubmit the old ED Form 553.

Write "Resubmission" on the envelope.

Include the "Corrections Worksheet" that accompanies every rejected assignment submission, with each resubmission.

C. Notification to Borrowers of Assigned Loans

If your institution has chosen to notify borrowers of the pending assignment of their loan(s) to ED, we strongly urge you to make such notification at least 90 days prior to assignment to ED. Occasionally this notification results in payments from borrowers who, in the past, have been unwilling to make payments.

Any payments received by institutions or their servicers after the certification date on the ED Form 553 become the property of ED, unless ED rejects that account.

Borrowers seeking to make repayment after acceptance of their loans for assignment to ED should be referred to the appropriate ED Regional Collection Center cited in Section VI "Information Sources" and on your acceptance notification form. Do not refer borrowers to the ED Central Office in Washington, D.C.

D. Withholding Transcripts

As a result of a borrower's default in the Title IV Student Loan Programs, the Department of Education encourages the withholding of academic transcripts. The withholding of academic transcripts is solely an institutional decision, but has resulted in numerous loan repayments.

The withholding of financial aid transcripts is covered in the Student Assistance General Provisions Regulations, December 1, 1987, Final Regulations, 34 CFR 668.19, Section Amended December 1, 1995, Effective July 1, 1996.

E. Payments from Borrowers Received after Assignment

Payments from a borrower received by an institution or its servicer after the borrower's account has been assigned to ED should be forwarded, as soon as possible, to:

National Payment Center
P. O. Box 4169 - Perkins Loan (NDSL)
Greenville, Texas 75403-4169

Each payment must clearly identify the borrower's full name, social security number, and the type of loan to which the payment is to be applied.

If payments are received on accounts that have been submitted to ED for assignment, but have not yet been accepted by ED, the institution should deposit the funds immediately and await official notification of acceptance. Upon acceptance, the institution must issue a check to ED, including the borrower and loan information noted above.

Once an account is submitted for assignment, it becomes the property of ED and will only be returned to the institution for deficiencies related to its submission. Therefore, an institution should not contact ED to request the return of a submission because a borrower has made a payment to the institution.


Any collection agency fees that are deducted from payments received after account submission to ED are the sole responsibility of the institution and may not be charged to the Federal Perkins Program Loan Fund. The entire payment must be forwarded to ED.

VI. Information Sources

Questions regarding the assignment process as it pertains to the rest of the student financial aid award process or questions concerning the management of student loans not assigned to ED (for example, validity of certain types of promissory notes) should be directed either in writing or by phone to the ED Student Financial Assistance Program. Regional Office serving your region.
More specific questions pertaining to the procedures for assignment of accounts set forth in this letter, or pertaining to the status of your assignment submissions, or pertaining to the correction of rejected submissions, can be directed to the Debt Collection Service at the ED Central Office, on (202) 708-4766. Written inquiries should be mailed to:

U.S. Department of Education
Debt Collection Service/Washington Service
Center/Perkins Loan Assignments
600 Independence Avenue, S.W.
ROB #3, Room 5118
Washington, D.C. 20202-5320

All inquiries must include your Federal Perkins Loan Program school identification number (SID #).

As noted throughout these procedures, explanations of absences of certain assignment documentation, or their irregular nature, require formal approval by the appropriate official. Therefore, all such explanations should be prepared in writing, with the following signature block provided:

Approved/Not Approved



___________
Assignments Specialist
Debt Collection Service

All such explanations must reference the specific account(s) affected by the documentation omission or irregular nature. The explanatory letter should then be transmitted by facsimile to the above office at 202/708-4954. The returned, signed facsimile will then constitute formal approval. Do not contact the ED-contracted assignments processing center with such inquiries.

Questions on the cohort default-rate calculations can be directed to the Campus-Based Programs Policy Development Division, at the ED Central Office on 202/708-8242. Questions on the Fiscal Operations Report can be directed to the Institutional Financial Management Division, at the ED Central Office on 202/708-7741. Questions on closed school procedures can be directed to the State Liaison and Closed School Branch on (202) 205-2275. Questions on liquidation procedures can be directed to the Campus-Based Program Office on (202) 708-9183.

The addresses and toll-free telephone number of the ED Debt Collection Service (DCS) Regional Service Centers (RSCs) are listed on the next page. You should contact these offices to resolve any discrepancies between your records and those of ED pertaining to accounts that have already been assigned to ED and accepted. This includes corrections to acceptance notices, bankruptcy notices, and any other general information on accepted accounts that you wish to forward. These offices should also be used to direct defaulters wishing to satisfy their debts once their loans have been accepted for assignment. These offices are not for inquiries pertaining to the assignment process or to rejected accounts. Such inquiries should be directed only to the Debt Collection Service, Washington Service Center, noted above.

ED/Debt Collection Service (DCS), Regional Service Centers:

The single toll-free telephone number which routes incoming telephone calls to the RSCs is 1 (800) 621-3115.


Serving the Following
DCS Region IV - Atlanta SFAP Regional Areas

U.S. Department of Education Region I - Boston
Debt Collection Service Region II - New York
Atlanta Service Region III -Philadelphia
61 Forsyth Street, SW Region IV - Atlanta
Atlanta, GA 30303

Serving the Following
DCS Region V - Chicago OSFA Regional Areas

U.S. Department of Education Region V - Chicago
Debt Collection Service Region VI - Dallas
Chicago Service Center
111 N> Canal Street, Suite 1009
Chicago Illinois 60606

Serving the Following
DCS Region IX - San Francisco OSFA Regional Areas

U.S. Department of Education Region VII - Kansas City
Debt Collection Service Region VIII - Denver
San Francisco Service Center Region IX - San Francisco
50 United Nations Plaza, Room 247 Region X - Seattle
San Francisco, California 94102


[[This file contains the "Federal Perkins Loan Program Assignment Submission Procedures Exhibit #1" in Portable Document Format (PDF). It can be viewed with version 3.0 or greater of the free Adobe Acrobat Reader software.]]

Exhibit 2

FEDERAL PERKINS LOAN PROGRAM

(Formerly National Direct [or Defense] Student Loan Program)

ASSIGNMENT
ED FORM 553



General Instructions:

The approved ED Form 553 is designed to serve as the transmittal form for one borrower. Please read all instructions carefully before completing this form.

Section 463(a)(5), 20 U.S.C. 1087cc authorizes this request. No assignment of a Federal Perkins Loan, a National Direct Student Loan, or a National Defense Student Loan may take place unless accompanied by a completed ED Form 553.

-- Do not combine Defense, Direct, and Federal Perkins Loan
information on the same ED Form 553. In those cases where
a borrower received more than one type of loan, a separate
ED Form 553 must be completed for each.

-- Submit one original and one photocopy of a completed ED Form 553
for each defaulted loan account being assigned to the U.S.
Department of Education. Please retain a photocopy for your
institutional records.

-- Submit the original promissory note(s) and all required due
diligence documentation in accordance with applicable regulations
(and/or procedures) for each assignment to the U.S. Department of
Education.

-- All financial information must be entered as dollars and cents
(e.g.,$1,200 or $1,200.44).

-- All items requiring dates must be entered on the form as Month,
Day, and Year (e.g., January 1, 1995 or 01-31-84).

-- This form may be photocopied should supplies run short; however,
all assignments must bear an original signature in Item 10.

-- It is mandatory that a social security number for each borrower
be provided on the ED Form 553.


Exhibit 3

Detailed Instructions:


Section A INSTITUTIONAL INFORMATION

Item Number Instructions

1 Full name of submitting institution.
If branch campus, identify as such.

2 Full street name and number of institution.

3 City in which institution is located.

4 State in which institution is located.

5 Four-digit campus-based serial number as
found on the institution's campus-based
award letter.

6 Institution's nine-digit employer
identification number as assigned by the
Internal Revenue Service along with the
two-digit suffix assigned by the Central
Registry System ofthe Department of
Education.

7 Zip code of submitting institution's
address.

8 Typed name of authorized institutional
official making the assignment.

9 Date of submission to the U.S. Department
of Education. Show as MM/DD/CCYY. If
submission is received on or after July 1
of a particular year, certification must
reflect that date. The certification
date of any resubmission must be updated
if more than 60 days since original.

10 Original signature of authorized
institutional official whose name appears
in Item #8.

11 Typed title of authorized institutional
official making the assignment.

12 Telephone number (include area code)of
authorized official.

13 Name of individual to be contacted in
absence of authorized institutional
official.


Section B BORROWER INFORMATION


Item Number Instructions

14 Current or last known name of
borrower.


15 Any other name by which borrower may
have been known (maiden names, name
changes, etc.).

16 Social Security number of borrower as
ascertained from institutional
records. Do not provide institutional
account number.

17 Birth date of borrower as ascertained
from institutional records.

18 Specific date or best approximation of
date borrower left the institution.

19-23 Current address and telephone number
of last known permanent address and
telephone number of borrower. Do not
show an institutional residence hall
address.

24-28 Any work address(es) and telephone
number(s) of borrower as ascertained
from institutional files. Use
additional sheets if necessary.

29 Full name of individual who cosigned
this loan for the borrower, if
applicable. (NOTE: Any defaulted
Federal Perkins Loan signed for by a
minor on or after July 23, 1992, being
submitted for assignment, cannot bear
the signature of a cosigner.)

29A Social Security number of cosigner is
no longer required, however, if one
has been ascertained from the
application, please provide it.

30-34 Most current address and telephone
number available for any cosigner of
this loan.

Section C LOAN INFORMATION - HISTORICAL

Item Number Instructions


35-37 Type of loan disbursed terms of
promissory note.

38 Interest rate reflected on promissory
note at which this loan was made or
subsequent interest rate changes due
to litigation and presence of a
judgment. ED acceptance of any
promissory note bearing an interest
rate that is not in compliance with ED
regulations for that timeframe will be
reported to the ED Campus-Based
Financial Management Section for
reconciliation with the assigning
school.

39 Date of last disbursement, not original
date of loan. (NOTE: In the event of a
late disbursement [e.g., after the
borrower's departure date], please enter
the date for which the promissory note
was signed, the date that the last
advance became effective.)

40 Date last grace period ended (e.g. six
(6) months from the departure date,
nine (9) months from the departure date)

41 Date following the day on which payment
was due and not received, resulting in default.

42-44 Date of acceleration (if marked "yes") or
date the loan would have "matured", i.e.,
been paid-in-full, if past (if marked
"no"). Attach documented proof.

45-47 Indication of whether loan was ever
litigated and effective date of
judgment. Attach documented proof
(e.g. worksheet showing calculations,
etc.)

48-53 FOR SCHOOLS IMPLEMENTING CLOSURE OF
INSTITUTION OR PROGRAM ONLY: Indication
of alternative status of student at time
of closure: I (in school); G (Grace
Period); D (Deferment); R (Repayment).

49-54 Indication of primary reason loan
uncollectable. If "other", explain
(e.g. withdrawing from Perkins Loan
program; school is closing)
Section D LOAN INFORMATION - FINANCIAL

Item Number Instructions

55 Original amount loaned to borrower as
indicated on promissory note, or, if
applicable, total amount outstanding
on judgment. This should total what’s
on the promissory note. NOTE: DO NOT
INCLUDE REFUNDS UNDER THIS ITEM, See
item #56.

56 Any amount refunded or never disbursed
which would reduce the principal
amount for which the borrower is
liable. Attach documented proof.

57 Total amount repaid and credited to
principal as of certification date.

58 Total amount of principal that has
been canceled on this loan.

59 Total principal amount of this loan
which is currently outstanding. (Item
55 less 56, 57 and 58).

60 Total amount of collection costs
repaid, as of certification date.

61 Total amount of interest repaid, as of
certification date.

62 Total amounts of interest which have
been canceled on this loan.

63 Total amount of interest due, as of
the certification date.

64 Total amount of collection costs which
have been properly assessed on this
loan, in accordance with program
regulations, penalty or late charges
assessed against the loan which are
outstanding as of the certification
date. The costs attributable to the
following activities can be included:
skip-trace, litigation, address
search, letters, etc.

65 Total dollar amount currently
outstanding on this loan.

Section E CANCELLATION AND DEFERMENT INFORMATION

Item Number Instructions

66-94 Any cancellations that have been
exercised on this loan. Show dates
as MM/DD/CCYY. Attach documentation.

95-103 Any deferments that have been exercised
on this loan. Show dates as MM/DD/CCYY.
Attach documentation.