NEW UPDATE October 2017:
The Federal Perkins Loan Program expiration date has passed without extension and now the countdown is on for the program wind-down. On October 6, the Department of Education issued a Dear Colleague Letter, GEN-17-10, which provides important wind-down information and indicates the Department will begin collecting the Federal share of institutions’ Perkins Loan Revolving Funds following the submission of the 2019-2020 FISAP (due October 1, 2018) using a similar process to the Excess Liquid Capital currently in place under HEA section 466(c). The Department of Education has promised more information on this process ahead of the October 2018 deadline.
Institutions should be reviewing their portfolios to determine if they will choose to assign their Perkins Loans to the Department or continue servicing their portfolio. Once the loans are assigned, institutions lose all rights to future loan collections, including their institutional share.
Loans that are not assigned to the department should continue to be serviced under Perkins Loan Program regulations until all loans are paid in full, fully retired or assigned to the Department. The process of requiring the distribution of assets from the Perkins Loan Revolving Fund will continue each year based on the annual submission of the FISAP, until all of the Perkins Loans held by the institution have been paid in full, fully retired or assigned to the Department of Education.
An administrative cost allowance cannot be charged against the Perkins Loan Revolving Fund after June 30, 2018.
For those considering liquidation and assignment, the Assignment and Liquidation Guide provides step-by-step instructions through the process, including the required a Perkins closeout audit. We are experienced with the Perkins closeout and stand ready to assist.
NEW UPDATE March 30, 2016:
A new combined Federal Perkins Loan Assignment and Liquidation Guide has been posted. You can see the announcement and links to the updated guide here.
The Federal Perkins Loan Program has expired, effective October 1. While guidance has not yet been issued by the Department of Education in response to program’s expiration, there is a published process for institutions to follow to liquidate a Perkins Loan Revolving Fund.
The process outlined in this article on the Department of Education’s website was written for institutions voluntarily withdrawing from the program or for those with a change in eligibility status. It remains to be seen if this process will be adopted for all institutions as a result of the expiration. Helpful information on the wind-down of the program can be found here.
We'll keep you informed as guidance is issued
BerryDunn’s Higher Education experts are monitoring the situation and assessing the implications for colleges and universities and their loan recipients with outstanding balances.
Need help or have additional questions?
Our experience with Perkins loan liquidation/closeout audits can be of great help to you as you navigate the complexities of closing your Perkins loans. Feel free to contact Renee Bishop, Emily Parker, Mark LaPrade or any of our Higher Education experts.