Education Department Issues Guidance on Perkins Loan Wind-Down

October 16, 2017

The U.S. Department of Education has published guidance to colleges and universities regarding the wind-down of the Perkins Loan program. Absent congressional action, no Perkins Loans disbursements are permitted after June 30, 2018.
The Department will begin collecting the federal share of institutions’ Perkins Loan Revolving Funds following the submission of the 2019-2020 Fiscal Operations and Application to Participate (FISAP), which is due October 1, 2018. The process for determining the federal share of the revolving fund will be similar to the Excess Liquid Capital (ELC) process the Department currently has in place. The ELC process accounts for changes and fluctuations in the Institutional Capital Contributions (ICC) matching requirements over time – as well as any overmatching by the institution. However, the Department will not consider unreimbursed cancellation amounts in determining the federal share of the revolving fund.
Because institutions will continue to service outstanding Perkins Loans beyond 2018, the ELC process will continue regularly until all federal capital contributions have been returned to the Department. Institutions are also given the option to liquidate the portfolio or to assign servicing of Perkins Loans to the Department.
The Department has indicated that it will provide further guidance, including more information on the distribution of the assets of institutions’ Perkins Loan Revolving Funds prior to the FISAP submission deadline on October 1, 2018.       

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