Mandatory Assignment: Federal Perkins Student Loan Assignment Procedures

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Mandatory Assignment Federal Perkins Student
Loan Assignment Procedures
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Session Overview

• Discussion of Negotiated Rule Making Process
• Impact on Perkins recovery rates
• Mechanics of the assignment process
• Action items for program advocates

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Liquidation rates by account age

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Recovery rates by portfolio

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Recovery by payment type

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Recovery by payment type

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Recovery by payment type

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Impact

• 40 million per year of lost revenue
• Seizure by the federal government of private and
  state government assets
• Non reimbursement of the substantial litigation
  expense
• Loss of possible recovery of real property liens
• Cost of collections for recovered monies

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Additional Expenses

• Staffing cost to prepare assigned accounts
• Postal expense for assignment submissions
• Legal expenses to have judgments transferred to
  the Department of Education
• Replacement cost of Federal Perkins Student Loans
  with institutional loan (if funds are available)

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Student Consequences

• Students stopping out of school
• Borrowing higher interest rate student loans
• Favorable repayment/deferment options
• Lost of cancellation benefits
• Missed opportunities for students to continue
  their education

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Concerns of Schools

• Is this regulation in the best interest of the
  schools or its students?
• How will increased recovery of Perkins funds
  serving Higher Education?
• Viability of the Federal Perkins Student Loan
  Program
• The future of the Perkins Program

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Mandatory Assignment Preparation

• Schools have begun to assign accounts
• Billing services have identified the accounts
  which fit the age requirements
• Collection agencies and law firms are
• re-working accounts and seeking payments
• Schools have redesign letters and increased
  collection activities
• Schools have implemented special initiatives

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IT CAN BE EASY TO ASSIGN!

• Assignment process redesigned for easier
  submissions
• Supporting documentation streamlined

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Go to

• http//ifap.ed.gov/dpcletters/cb0312.html
• for complete instructions

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The Federal Government Can

• Administrative wage garnishment
• Federal offset of tax refunds
• Litigation by the Department of Justice

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The Assignment Process and the Required Forms

• Institutional Certification Form
• Submission Package Manifest
• Perkins 553 Assignment Form (Exp date 6/30/2009)
  original and photocopy
• Original Promissory Note(s)
• Judgment Information
• Bankruptcy -If there is a judgment granting
  relief, the loan is not eligible for assignment.
• Diligence Documentation (if applicable)

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If a Promissory Note available

• Original Promissory Note not available? Use a
  Certified True Copy
• I declare under penalty of perjury that the
  foregoing is a true and correct copy of the
  original promissory note.
• You may send copies of front/back cancelled check
  disbursed, customer ledger showing loan(s)
  disbursed, vouchers, financial aid records

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Due Diligence Documentation

• If your institution has a cohort default rate
  below 20 as of June 30 of the second year
  preceding the year in which the Assignment
  submission is made, you are NOT required to
  submit documentation of due diligence activity.
• If your institution is higher than 20, you must
  submit documentation indicating the required due
  diligence has been met
• See CB-03-12 Assignment Submission Procedures,
  Page 7 for details

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OPTIONAL DOCUMENTATION

• Disbursement Records
• Signed Repayment Schedule
• Complete Repayment History
• Acceleration Notice
• Documentation of Recalls
• Approved Cancellation Documentation

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Assignment Submission

• Submit the assignment package using the
• U.S. Postal Service
• Department of Education
• Perkins Loan Assignment Processing Center
• PO Box 4136
• Greenville, TX 75403-4136

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Resubmission

• If the DOE returns the file(s) you may still
  correct the information and resubmit if you do so
  within 45 days.
• Use the same Assignment form, make the necessary
  changes and initial by each change in BLUE or
  BLACK ink only.
• If you use the same form and resubmit within 45
  days, change the Certification Date and Interest
  Amount Due!
• Resubmission must be clearly written on the
  envelope, and an Assignment Submission package
  manifest must be included along with the
  Corrections Worksheet that was returned
• You may also use a new Assignment form

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After the Loan is Accepted

• Do appropriate write off in your loan system
• Transcript Holds
• DOE encourages schools to Hold Transcripts until
  you receive proof that the loan is paid
• Record Retention
• 34 CFR 674.19 (e) states that records must be
  retained for 3 years from date of Assignment