The Federal Perkins Loan Program included Federal Perkins Loans, National Direct Student Loans (NDSLs), and National Defense Student Loans (Defense Loans). Perkins Loans were low-interest, long-term loans made through school financial aid offices to help students who had unmet need pay for postsecondary education.
The Federal Perkins Loan (Perkins) Program included Federal Perkins Loans, National Direct Student Loans (NDSLs), and National Defense Student Loans (Defense Loans). No new Defense Loans were made after July 1, 1972, but a few have not been fully retired. No Perkins disbursements were permitted under any circumstances after June 30, 2018. If you awarded a Perkins Loan after September 30, 2017, or made a disbursement after June 30, 2018, the award or disbursement was made in error and must be corrected. In this case, the school must:
notify the borrower; reimburse the Perkins Loan Revolving Fund for the amount of the loan(s); update NSLDS accordingly; and correct the FISAP.See the “Perkins Loans Awarded or Disbursed after the Expiration of the Perkins Loan Program” EA of December 20, 2018 for more in- formation on Perkins Loans awarded or disbursed after the expiration of the authority to award new Perkins Loans. For more information on processing Perkins portfolios, go to: the Campus-Based Processing Information page on the Knowledge Center website.
The Federal Perkins Loan Extension Act of 2015 prohibits making new Federal Perkins Loans after September 30, 2017. No disbursements of Federal Perkins Loans are permitted after June 30, 2018. Therefore, schools are no longer able to enter a request for an LOE on their school’s FISAP. However, schools are permitted to charge allowable collection costs to the Perkins Revolving Fund as allowed under 34 CFR 674.47.
The Federal Perkins Loan Program The Federal Perkins Loan Program 34 CFR Part 674 DCL GEN-17-10Due to the expiration of the authority to award new Perkins Loans, the Department has not been collecting Excess Liquid Capital from a school’s Perkins Loan Revolving Fund since the 2017–2018 award year. With the wind-down of the Perkins Loan Program, this process has been replaced by a similar process, the Distribution of Assets process, which distributes the cash received through portfolio collections at year’s end. Please refer to the section below for additional information regarding returning the federal share to the Department.
The Extension Act amended HEA section 466(a). The HEA now requires each school participating in the Perkins Loan Program to return to the Department the federal share of the school’s Perkins Loan Revolving Fund (fund). The Department began collecting the federal share of schools’ funds following the submission of the 2019–2020 FISAP. This is part of the wind-down of the Perkins Loan program.
The process used to determine the federal share of the Perkins Loan Revolving Fund, which must be returned to the Department, and the institutional share, which must be removed and returned to the institution, is similar to the Excess Liquid Capital (ELC) process the Department had in place in accordance with HEA section 466(c). It is important to note that the Perkins Loan Revolving Fund asset distribution process accounts for changes in the Institutional Capital Contribution (ICC) matching requirements that have occurred over time, as well as any overmatching by the institution. Also taken into consideration is any Federal Capital Contribution (FCC) that has been previously returned by the institution to the Department, and any Institutional Capital Contribution (ICC, also known as nonfederal share) that was previously returned to the institution.
Because schools may choose to continue servicing their Perkins Loans, the process of requiring the distribution of assets from the Perkins Loan Revolving Fund will continue on an annual basis, until all of the outstanding Perkins Loans held by the school have been paid in full, otherwise fully retired, or assigned to and accepted by the Department. Schools that choose to continue servicing their outstanding Perkins Loan portfolios must continue to service these loans in accordance with the Perkins Loan Program regulations in 34 CFR part 674 and must also continue to report on their outstanding loan portfolio to the Department’s National Student Loan Database (NSLDS) monthly as well as annually, using the FISAP. Because schools may no longer advance funds to students, they may no longer claim an administrative cost allowance against their school’s Perkins Loan Revolving Fund.
The distribution of your school’s assets is calculated using the Proportional Share formula and information from your school’s most recently submitted FISAP. The Proportional Share calculation includes both the changes in your school’s cumulative Institutional Capital Contribution (ICC) matching requirements and any funds in excess of this which have been provided by your school. The calculation also takes into consideration any Federal Capital Contribution (FCC) that had been previously returned by your school to the Department and any ICC that was previously repaid to your school from the Perkins Fund.
Schools can easily find this information in Section F of the FISAP which was added to improve efficiency and oversight. Both the federal and institutional share percentages are calculated and automatically populated in this section using data entered in Section A.
Calculation of your school’s amount of partial service cancellation reimbursement uses cancellation data reported on the FISAP. This process takes into consideration any prior reimbursement for service cancellations. If your school determines that any of the items used in the calculation were misreported on your submitted FISAP, corrections should be made prior to the annual December corrections deadline.
After the FISAP is submitted, and if applicable, corrections have been made through the COD system by the annual deadline dates, the Department will notify institutions that have reported cash in the institution’s Perkins Fund subject to the distribution of assets process. The notification will communicate the amounts of funds, both the federal and institutional shares, that must be removed and returned to the Department and to the institution, respectively. Only the federal share the Department requests should be remitted through G6 by the deadline communicated in the notification.
NOTE: Institutions should not remove and return any funds to the Department or the institution until the institution has been notified to do so.
When returning the federal share of funds distributed under the Distribution of Assets process, schools should follow the instructions for the “Perkins Excess Cash” refund type in G6 (https://g6.ed.gov) to ensure accuracy in processing the payment made. Detailed instructions for Returning Federal Perkins Program Funds to the Department are located on the Knowledge Center on the Campus-Based Processing Information Topics Page. For more details, see the “Electronic process (G6) for Returning Perkins Loan Funds to the Department” section later in this chapter. Note that in the fall of 2023, the Department began changing over to the new G6 system and will publish updated instructions for using G6 as further modules and functionality are implemented.
Institutions should return the federal share through the G6 miscellaneous refund functionality. Note that the Department will not accept checks after 9/30/23. In order to initiate a refund in G6, the Payee user must have already entered refund banking information under Payments, Refund Bank Account Maintenance, even if there is already a bank account connected to the Payments functionality.
Please be advised that before submitting a refund via G6, the school should notify their bank that they will be doing so, as some banks will not release the funds unless notified in advance. The bank should be provided with the following ACH Company ID for the U.S. Department of Education: 910 200 0102.
If you have questions about the Distribution of Assets process, please contact the FSA Partner and School Relations Center, at 1-800-848-0978. You may also email CODSupport@ed.gov.