ED to Delay Recalling Federal Perkins Loan Funds

Prepared by: Greg Marak (gmarak@bosewashingtonpartners.com) and Jared Solomon (jsolomon@bosewashingtonpartners.com)

November 27, 2018

At the 2018 Federal Student Aid (FSA) Training Conference in Atlanta this week, the Department of Education’s Director of Policy Liaison and Implementation Jeff Appel announced that the Department plans to delay the recall of Federal Perkins Loan funds for the time being while it looks for ways to address unreimbursed Perkins cancellations. This updates previous guidance that said the Department would begin recalling excess funds as soon as next month.

COHEAO and other industry groups have been strongly encouraging the Department to fulfill its obligations to institutions and repay them for the institutional share of cancelled loans, as is required by the Higher Education Act, despite the absence of a specific congressional appropriation. This week, the American Council on Education (ACE) released a statement encouraging the Department to fulfill this obligation and published a letter sent to member institutions on the same matter. ACE and the National Association of Student Financial Aid Administrators (NASFAA) sent a joint letter to the Department last month encouraging ED to delay any remission of funds until the matter of schools being reimbursed was resolved. NASFAA President Justin Draeger said, “Today’s announcement marks a step in the right direction towards ensuring the responsible closeout of this program.”

COHEAO members have been in contact with the Department over recent months regarding the issue of excess funds, and we will continue to monitor the situation and look for any additional guidance.

In addition, COHEAO is talking to the Department about implementation of a new law that permits the Department to pay schools for servicing Perkins loans now that the Perkins administrative cost allowance is no longer available. We will keep members updated when information becomes available on this issue. The provision authorizing the Department to pay schools for Perkins servicing was included in the law passed by Congress in September funding the Department for fiscal year 2019.