Proposed Senate Appropriations Legislation Again Includes Authorization for Perkins Servicing

September 19, 2019 · by mlivolsi · Spark Notes

The Senate Appropriations Committee has just made public its version of legislation funding the Department of Education in Fiscal Year 2020, which begins on Oct. 1, 2019.  The legislation, like the version passed by the House of Representatives earlier this year, again includes authorization for the Department to pay institutions to service Perkins Loans.  Since the identical language is included in both the House and Senate versions of the legislation, it is highly likely the final bill that becomes law will include this section.  It is the same as what was passed by Congress in 2018 for the current fiscal year. 

Also, to bolster the Department in its recent announcement that it has decided it can reimburse campuses for the institutional share of Perkins Loans that have been cancelled over the years, and in the future, the Senate Appropriations Committee in its formal Report explaining its legislation “strongly encourages” the Department to move quickly in setting up the process for reimbursement.

COHEAO worked with the Department for months on the cancellation provision and is continuing to do so.  We do expect quick action now that the decision has been made to reimburse institutions by allowing them to retain what they are owed from the federal share of loan repayments.  Institutions will be able to use the funds for any purpose.

COHEAO continues to encourage the Department to set up a method for paying institutions to service Perkins Loans.  Once the Department completes the roll-out of the process for reimbursements for cancelled loans, it may be able to turn attention to servicing.  This will also have the double benefit for institutions of allowing them to collect their share of cancelled loans.  Institutions that liquidate their Perkins portfolios will not be reimbursed for their share of cancelled loans.   Congress’s decision for a second time to authorize payments to institutions for Perkins Servicing from funds generally appropriated for federal student loan servicing should encourage the Department to take action on the servicing issue.

The following is excerpted from the Report of the Senate Appropriations Committee for FY2020 Department of Education appropriations:

From Page 229:

Perkins Loan Cancellations.—The Committee strongly encourages the Department to issue guidance within 60 days of enactment to institutions of higher education regarding the wind-down of the Perkins Loan Program and loan cancellations and reimbursements made under the program.

From Page 244:

Section 308. The bill continues a provision regarding servicing of Federal Perkins Loans.

Here is the wording from the actual Senate legislation, which is likely to become law:

From page 135 of the Senate Appropriations bill funding the Department of Education in FY2020:

SEC. 308. Funds appropriated in this Act under the heading ‘‘Student Aid Administration’’ may be available for payments for student loan servicing to an institution of higher education that services outstanding Federal Perkins Loans under part E of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087aa et seq.).


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