Today, the Department of Education released an updated version of its “Guidance for helping Title IV participants affected by a major disaster” Dear Colleague Letter. Below is the guidance relating to the Campus-Based Programs generally and Perkins Loan specifically. The announcement and the full letter from the Department of Education are also available online.
General Campus-Based Program Issues
Allocation Reduction Due to Under-Utilization (§673.4(d)(3)). In general, if an institution returns more than 10 percent of its allocation under the Federal Perkins Loan, Federal Work-Study (FWS), or Federal Supplemental Educational Opportunity Grant (FSEOG) programs for an award year, the institution’s allocation for the program in question for the second succeeding award year is reduced by the amount unexpended. The HEA authorizes the Secretary to waive this reduction for an institution if enforcing it is contrary to the interest of the program. The Department considers the failure of an institution to expend funds solely due to a disaster to be an appropriate reason for using this waiver authority. An institution must submit a request for a waiver of the under-utilization penalty along with a statement that explains the reason for its failure to comply with the requirement. Affected institutions should make the waiver request as soon as possible by contacting the Campus-Based Call Center at 1-877-801-7168.
Filing Deadline for Fiscal Operations Report and Application to Participate (FISAP). The Secretary will consider on a case-by-case basis the effect of a disaster on an institution’s ability to meet required reporting deadlines. If an institution is having trouble filing its complete FISAP by the published deadline because of a disaster, the Department will assist the institution. An affected institution should request assistance as soon as possible by contacting the Campus-Based Call Center at 1-877-801-7168.
Federal Perkins Loan Program
Reporting Student Enrollment Status (§674.16(j)). If an institution is unable to report a student’s enrollment status to NSLDS under the established schedule as a direct result of a disaster, it must contact NSLDS Customer Service at 1-800-999-8219 to modify its reporting schedule. An institution using the National Student Clearinghouse or another third party servicer should contact its servicer to see if its enrollment data submission schedule needs to be adjusted. If an institution receives a warning letter from NSLDS regarding missed reporting deadlines, it should contact NSLDS Customer Service to ensure that reporting schedule modifications have been made.
A Borrower’s Loan Status (§674.31). If a Perkins Loan borrower who was in an “in-school” status on the date the borrower’s attendance at the institution was interrupted due to a disaster, the institution should continue to report that borrower’s status to NSLDS as “in-school.” The institution should continue the borrower in that status until the borrower withdraws or fails to resume attendance on at least a half-time basis in the next regular enrollment period, whichever is earlier. The institution should then change the borrower’s status from “in-school” to “in grace,” effective as of the withdrawal date or the day prior to the first day of the next regular enrollment period, as applicable. (A borrower who resumes at least half-time enrollment in the next regular enrollment period would continue in an “in-school” status.)
For example, assume a borrower begins attendance on September 5. On September 30, the institution temporarily closes due to a disaster. The institution reopens October 25 but the borrower (who has not withdrawn) does not return until the start of the next semester in January. The borrower’s status should be reported as “in-school” throughout the fall semester.
In a different situation, assume that the borrower does not return to the institution at all after it temporarily closes on September 30. The borrower’s status should be reported as “in-school” throughout the fall semester. If the institution determines that the borrower has not returned for the spring semester in January, the institution would report the borrower’s status as “in-grace,” effective as of the last date of the fall semester.
Borrowers in Initial or Post-Deferment Grace Periods (§674.42). The appropriate School Participation Division will address any concerns about borrowers in initial and post-deferment grace periods, on a case-by-case basis.
Borrowers in Repayment (§674.33). The Department authorizes institutions to grant forbearance, for a period not to exceed three months, to a Federal Perkins Loan borrower who is in repayment at the time of a disaster and who is unable to make payments due to the disaster.
Interest accrues during any period of forbearance. A borrower may request this forbearance orally or in writing, and is not required to submit documentation to be considered eligible for this forbearance. An institution must document the forbearance in the borrower’s file. To receive forbearance beyond the three-month period, the borrower must make a request to the institution and provide supporting documentation. (At the expiration of the three month period, the institution should examine the borrower’s situation to determine potential eligibility for an economic hardship deferment or unemployment deferment, as appropriate.) This period of forbearance is counted toward the 3-year maximum limit on the number of years of forbearance that may be granted to a borrower.
Collection of Defaulted Loans (Part 674, Subpart C—Due Diligence). The institution may stop collection activities for three months upon notification by the borrower, a member of the borrower’s family, or another reliable source that the borrower has been affected by a disaster. Collection activities must resume at the end of the 3-month period. The institution must document in the loan file why it suspended collection activities on the loan, and is not required to obtain evidence of the borrower’s status while collection activities have been suspended. The appropriate School Participation Division will address any additional concerns about required billing and collection activities on a case-by-case basis.
Satisfactory Repayment Arrangements on Defaulted Loans (§674.2). During the time a borrower is affected by a disaster, an institution should not treat any scheduled payment the borrower fails to make as a missed payment in the stream of six on-time, consecutive, monthly payments required for the borrower to make satisfactory repayment arrangements on a defaulted Perkins Loan and to re-establish his or her eligibility for assistance under Title IV of the HEA. When the borrower is no longer affected by the disaster, the required sequence of qualifying payments may resume at the point at which it was discontinued.
Payments to Rehabilitate Defaulted Loans (§674.39). During the time a borrower is affected by a disaster, an institution should not treat any scheduled payment the borrower fails to make as a missed payment in the stream of nine on-time, consecutive, monthly payments required for the borrower to rehabilitate the defaulted loan. When the borrower is no longer affected by the disaster, the required sequence of qualifying payments may resume at the point at which it was discontinued