Introduction
|Section 4 |
Expiration of the Authority to Make New Loans and Subsequent Disbursements
Graduate Students - The Extension Act amended section 461 of the Higher Education Act of 1965, as amended (HEA), to end an institution’s authority to make new Perkins Loans to graduate students on September 30, 2016. However, if an eligible graduate student received a disbursement of a Perkins Loan before October 1, 2016, for the 2016-2017 award year, the student could receive any subsequent disbursements of that Perkins Loan.
Undergraduate Students - The Extension Act also amended HEA section 461 to end an institution’s authority to make new Perkins Loans to undergraduate students on September 30, 2017. However, if an eligible undergraduate student receives a disbursement of a Perkins Loan before October 1, 2017, for the 2017-2018 award year, the student may receive any subsequent disbursements of that Perkins Loan through June 30, 2018.
No Perkins Loan disbursements are permitted after June 30, 2018, under any circumstances.
In addition to the procedures for administering the Perkins Loan program outlined on the following pages, please ensure the institution’s procedures include the process as outlined in DCL GEN-17-10 for the following:
• Distribution of Assets from the Federal Perkins Loan Revolving Fund
• Assignment of Loans
Policy: Federal Perkins Loans Program
Regulations: 674.19 (Fiscal Procedures and Records), 674.33(d) (Forbearance),674.38 (Deferment), 674.42 (Contact with the borrower), 674.43 (Billing), 674.45 (Collection), 674.46 (Litigation), and 674.52 (Cancellation)
Purpose: This section provides requirements for the Federal Perkins Loans.
Scope: Specifically Address:
1. Fiscal Procedures and Records
2. Forbearance and Deferment
3. Contact with Borrowers
4. Billing
5. Collection
6. Litigation
7. Cancellation
Responsibilities:
(Identify individuals and/or offices responsible for developing and updating this section)
Definitions:
(Identify acronymns or definitions that will be used in this section)
Resources available to assist in the development of a manual:
• Fiscal Management Activity 6 Administrative Cost Allowance
• Perkins Due Diligence Activities 1, 2, 3 and 4
• Perkins Forbearance and Deferment Assessment
• Perkins Cancellation Assessment
• Review the 2020-2021 FSA Handbook (Volume 6) for guidance related to the topics in this section
• Review DCL GEN-17-10 Perkins Loan Extension Act of 2015. This includes important information about the wind down of the Perkins Loan program
|Part 4.1 |Fiscal Procedures and Records |This section is required Regulation: |
| | |674.19 |
Procedures that outline and follow provisions for maintaining general fiscal records as outlined in
34 CFR 668.24(b) and 34 CFR 668.164.
Please ensure that you have developed Fiscal procedures for this section. The Fiscal procedures that should be included are outlined in Section 1.5 of this guide. You may want to include a reference to that section of the guide to show that your Fiscal Control and funding accounting procedures are in place for the Federal Perkins Program.
In addition, your procedures must address the following Federal Perkins loan related fiscal information:
• A separate bank account for Federal Funds is not required, except as provided in 34 CFR 674.19(b).
• Your school shall notify and bank in which it deposits Federal funds of the accounts into which those funds are deposited by ensuring that the name of the account clearly discloses the fact that Federal funds are deposited in the account; or Notifying the bank, in writing, of the names of the accounts in which it deposits Federal funds. The school shall retain a copy of this notice in its files.
• Your school shall ensure that the cash balances of the accounts into which it deposits Federal Perkins Loan Fund cash assets do not fall below the amount of Fund cash assets deposited in those accounts but not yet expended on authorized purposes in accordance with title IV HEA program requirements, as determined from the records of the school.
• Establish and maintain program and fiscal records that are reconciled monthly.
• A process to coordinate and submit a Fiscal Operations Report (FISAP) plus other information the secretary requires. A process to insure that the information reported is accurate and is submitted at the time specified by the Secretary.
• The process to ensure the school follows the record retention and examination provision in 668.24.
• The process to ensure that the school retains a record of disbursements for each loan made to a borrower on a Master Promissory Note (MPN). This record must show the date and amount of each disbursement.
• The process to ensure that your school retains the disbursement and electronic authentication and signature records for each loan made using an MPN for at least three years from the date the loan is canceled, repaid, or otherwise satisfied.
• The process to ensure that your school retains repayment records, including cancellation and deferment requests for at least three years from the date on which a loan is assigned to the Secretary, canceled or repaid.
• The procedures to ensure that your school keeps the original promissory notes and repayment schedules until the loans are satisfied. If required to release original documents in order to enforce the loan, your procedures must ensure that the school retains certified true copies of those documents.
• The procedures to ensure that your school keeps the original paper promissory note or original paper MPN and repayment schedules in a locked, fireproof container.
• The procedures to ensure that if a promissory note was signed electronically, the school stores it electronically and the promissory note is retrievable in a coherent format. An original electronically signed MPN must be retained by the school for 3 years after all the loans made on the MPN are satisfied.
• The procedures to ensure that after the loan obligation is satisfied, the school returns the original or a true and exact copy of the note marked “paid in full” to the borrower, or otherwise notifies the borrower in writing that the loan is paid in full, and retains a copy for the prescribed period.
• The procedure to ensure your school maintains separately its records pertaining to the cancellations of Defense, NDSL, and Federal Perkins loans.
• The procedures to ensure that only authorized personnel have access to the loan documents.
|Part 4.2 |Deferment and Forbearance |This section is required Regulation: |
| | |674.33(d); 674.38 |
Required information:
• Process and handling of a student’s request for a forbearance as outlined in 34 CFR 674.33(d)
• Process for handling and processing a student’s request for a deferment except as provided in 34 CFR 674.38(a)(2).
• Process for reviewing continued eligibility of a deferment on an annual basis.
|Part 4.3 |Contact with the borrower |This section is required Regulation: |
| | |674.42 |
Required information:
• Process for disclosing the required information contained in 674.42(a) either shortly before the borrower ceases at least half-time study at the school or during the exit interview.
• Process to ensure that Federal Perkins Exit Counseling is conducted in accordance with 674.42(b).
The Process for disclosing the required information is:
|Part 4.4 |Billing |This section is required Regulation: |
| | |674.43 |
Required information:
• Billing procedures for all actions routinely performed to notify borrowers of payments due on their accounts, to remind borrowers when payments are overdue, and to demand payment of overdue amounts.
• Provide process to address all billing procedures that include at least the steps outlined in 674.43.
|Part 4.5 |Collection |This section is required Regulation: |
| | |674.45 |
Required information:
• Collection procedures that address a more intensive effort, including litigation as described in 34 CFR 674.46 to recover amounts owed from defaulted borrowers who do not respond satisfactorily to the demands routinely made as part of the institution’s billing procedures.
• Collection procedures that address when a borrower does not satisfactorily respond to the final demand letter or the following telephone contact made in accordance with 674.43(f), that the institution follows the requirements outlined in 674.45(1)(2)(3).
The Collection procedures are:
|Part 4.6 |Litigation |This section is required Regulation: |
| | |674.46 |
Required information:
• Litigation procedures if collection efforts described in 674.45 do not result in the repayment of a loan, the institution shall determine at least once every two years the guidance provided in 674.46.
|Part 4.7 |Cancellation |This section is required Regulation: |
| | |674.52 |
Required information:
• Procedures that outline how to qualify for a cancellation of a loan, a borrower shall submit to the institution to which the loan is owed, by the date that the institution establishes, both a written request for cancellation and any documentation required by the institution to demonstrate that the borrower meets the conditions for the cancellation requested.
• Address requirements for cancellation in regards to Part-time employment, Cancellation of a defaulted loan, and Concurrent deferment period as outlined
in 34 CFR 674.52.
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2020 2021 Section 4, Federal Perkins Loan, Page 1 of 5
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