Anita Olivencia, Training Officer

US Department of Education

Perkins Loan and Third-Party Servicer

Updates

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Agenda• Perkins Loan Program Status

• Excess Liquid Capital

• Perkins Loan Assignment System

• Perkins Reminders

• Third-Party Servicer Functions

• Reporting Servicers to the Department

• Contract Requirements

• Servicing Reminders

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Perkins Loan Program Status

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Perkins Loan Program History• The statutory authority for schools to make Perkins Loans

(HEA Section 461) ended on September 30, 2014, with an automatic one-year extension to September 30, 2015

• Language (now outdated) in HEA Section 466 calls for schools to return Federal share funds from the Perkins Loan Program to the government after October 1, 2012

• Department has interpreted HEA Section 461 to govern the duration of the Perkins program

Dear Colleague Letter GEN-11-02

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Current Program Status

Since Congress did not ultimately act to extend the program, the authority to make Perkins Loans to new borrowers ended September 30, 2015

• If school made the first disbursement of a Federal Perkins Loan for the 2015-2016 award year prior to October 1, 2015, school may make any remaining disbursements

− Loan may be increased in 2015-2016 assuming the student is eligible and the first disbursement was made prior to October 1

Dear Colleague Letter GEN-15-03

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Perkins Grandfathering

Narrow “grandfathering” provision allows schools to make Perkins Loans to certain students through September 30, 2020...if:

• Student received at least one Perkins Loan disbursement on or before June 30, 2015 (for 2014-15 award year or earlier),

and

• Student is enrolled at same institution where the last Perkins Loan disbursement was received, and

• Student is enrolled in same academic program for which student received his or her last Perkins Loan disbursement– first four digits of the program’s CIP code are identical

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Perkins Grandfathering

Grandfathered Perkins Loan can be awarded only after student is awarded all Direct Subsidized Loan aid for which s/he is eligible

• Full Direct Subsidized Loan eligibility must always be considered when determining Perkins eligibility

• Declining a Subsidized Loan does not mean a Perkins Loan may be added to a student’s aid package, or increased

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Undeclared Majors

For students whose program is “Undeclared” or “Undecided,” students may continue to receive Perkins under grandfathering provisions until and after they declare a major

• Once a major is declared, students must remain in that program to continue receiving Perkins

Perkins Loan Wind-Down Q&A:• http://ifap.ed.gov/cbpmaterials/attachments/

PerkinsQandAs.pdf

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Excess Liquid Capital

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Excess Liquid Capital

Section 466(c) of the Higher Education Act requires institutions to return to ED the Federal share of any Excess Liquid Capital (ELC) in the institution’s Federal Perkins Loan Revolving Fund

• ELC is the amount of the Fund’s “Cash On Hand” that exceeds the institution’s estimated immediate needs.

Dear Colleague Letter GEN-15-19

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Excess Liquid Capital

Federal share of Excess Liquid Capital must be returned by December 31, 2015

• ELC is calculated using worksheet attached to Dear Colleague Letter GEN-15-19

• If funds must be returned, follow “Instructions for Returning Perkins Funds” on the IFAP website:

http://ifap.ed.gov/cbpmaterials/attachments/InstructionsForReturningPerkinsFunds.pdf

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Perkins Loan Assignment System

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Perkins Loan Assignments

• For several years, the Department has encouraged schools to assign dormant loans

• Schools may choose to assign loans when:

− A Perkins Loan remains in default after due diligence, or

− An initial determination has been made for a total and permanent disability discharge, or

− The school wishes to voluntarily liquidate its Perkins portfolio

See August 5, 2011 EA

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Perkins Loan Assignments

• The Department has developed an easier electronic Perkins Loan assignment process

• This new Perkins Loan Assignment System (PLAS) allows users to:− Electronically submit loan assignment requests, either for

individual loans or for multiple loans as a batch file− Securely upload supporting documentation − Search, view, and edit submitted loan assignment information − View reports of accepted/rejected loans for assignment

Electronic Announcements: April 22 and September 21, 2015

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Perkins Loan Assignments

• Those wishing to use the new PLAS must request access − Access request form and User Guide available at

https://efpls.com

• More information about Perkins Loan Assignment Procedures is available at the Campus Based Processing Information site:

http://ifap.ed.gov/ifap/cbp.jsp

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Perkins Reminders

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Default Reduction Assistance Program

• The Default Reduction Assistance Program (DRAP) is a voluntary program to assist schools in bringing defaulted Federal Perkins Loan borrowers back into repayment before their accounts are sent to collection

− A letter is sent from the Department to defaulted Perkins borrowers, explaining the serious consequences of default

− Accessed via eCampus-Based site at https://cbfisap.ed.gov-------

Electronic Announcement: September 16, 2015

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Service Cancellation Reimbursements

• Although Perkins Loan service cancellations are not currently funded by Congress, schools must still offer and apply applicable cancellations to borrowers− Reimbursement payments were not issued in 2014-2015

(for 2013-2014 cancellation requests)

• ED calculated the 2013-14 reimbursement payment a school would have been eligible to receive and will maintain a record of that amount

Electronic Announcement: May 5, 2015

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Orange Book

Federal Perkins Loan Program Status of Default as of June 30, 2014 (the Orange Book) updatedApril 15, 2015

Electronic Announcement: March 23, 2015

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FISAP

Fiscal Operations Report for 2014-15 and Application to Participate for 2016-17 (FISAP)

• Electronic FISAP and signature page must have been submitted electronically by October 1, 2015− Can be signed electronically or via paper signature page− Edit corrections and Cash On Hand update due December 15

• ED’s online interactive FISAP training available at http://fsatraining.info

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Electronic Announcement: April 23, 2015

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Additional Resources

• Information for Financial Aid Professionals (IFAP) website Campus-Based Processing Resources:

http://ifap.ed.gov/ifap/cbp.jsp

• Electronic Announcement: April 23, 2015− FISAP Form, Instructions and References

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Third-Party Servicers

Reminders and Updates

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What is a Third-Party Servicer?

The regulations at 34 C.F.R. § 668.2 define a third-party servicer as follows:

An individual or a state or a private, profit or nonprofit organization that enters into a contract with an eligible

school to administer, through manual or automated processing, any aspect of the school’s participation in

any Title IV, HEA program.

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Examples of Servicer Functions• Processing of student financial aid applications

• Collecting, reviewing, or maintaining supporting documentation required to process Title IV funds

• Awarding, certifying, originating, and/or disbursing Title IV funds, and delivering credit balances

• Providing entrance and exit counseling

• Providing Perkins Loan servicing

• Completing enrollment, Gainful Employment or other required reporting

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Servicer Functions Not Considered Title IV-Related

• Publishing, providing, and administering ability-to-benefit tests

• Financial and compliance auditing, including preparation of financial statements

• Mailing of documents prepared by the institution • Warehousing of records• Providing computer services or software as long as the

provider is not responsible for using the software for the institution’s student aid purposes

• Participating in a written arrangement with other eligible schools to make eligibility determinations and FSA awards for certain students (e.g., consortium agreements)

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Reporting Servicers to the Department

Schools must inform the Department via the e-App (www.eligcert.ed.gov) within 10 calendar days of any of the following events:

• Entering into a contract with a new servicer

• Making changes to the functions performed bya servicer

• Terminating a contract with a servicer

• Servicer ceases to provide contracted services, goes out of business, or files for bankruptcy

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Servicer Contract Requirements

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Servicer Contract Requirements

Upon entering a contract with a school, the servicer must agree to do all of the following:

• Comply with all Title IV provisions (including those that refer solely to schools as well as those specific to servicers)

• Be jointly and severally liable with the school for a violation by the servicer of any Title IV provisions

• Use any Title IV funds (and interest or earnings on them) in accordance with the regulations

• Confirm student eligibility when disbursing funds

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Servicer Contract Requirements• Make required Returns to Title IV funds (R2T4) when a

student withdraws

• Refer to the Office of the Inspector General (OIG) any suspicion of crime relating to Title IV program administration (including any information that there is reasonable cause to believe the school may have engaged in fraud or criminal misconduct)

• Return to the school all unexpended FSA funds and any records related to the servicer’s administration of the school’s Title IV participation if the contract is terminated or the servicer files for bankruptcy or otherwise ceases to perform their functions under the contract

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Servicing

Reminders

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Third-Party Servicer Data Form

• An Electronic Announcement on February 12, 2015 directed servicers to submit a Third Party Servicer Data Form to the Department− Contains information about the servicer’s officials, contact

information, ownership structure, services, and clients

• Form was due within 30 days of the Announcement, and servicers must update their information if:− Changes its name− Changes the address or contact information− Adds or terminates a contract− Buys, sells, or merges with another third-party servicer

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FERPA and Third-Party ServicersUnder certain circumstances a servicer may be considered a “school official” for FERPA purposes. A servicer may receive and use Personally Identifiable Information (PII) without a student’s consent if:

• Performs a service or function for which the school would otherwise use employees, and

• Operates under control of the school with respect to the use and maintenance of education records, and

• Complies with the FERPA requirements governing the use and re-disclosure of PII from education records (34 C.F.R. § 99.31(a)(1)(i)(B))

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Servicer Compliance Audits

• Servicers are required to submit annual servicer compliance audits to the Department− These are separate and distinct from a school’s annual Title

IV compliance audit and financial statement

• Some servicers have failed to submit required audits− These servicers must submit a compliance audit to the

Department no later than one fiscal year subsequent to the date of Dear Colleague Letter GEN-15-01 (January 9, 2015)

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School Considerations

Periodically review your ECAR• Ensure that servicer information is accurate

− If any information is inaccurate or out of date, notify the Department by submitting updating the E-App at www.eligcert.ed.gov

Review servicer contracts• School can be liable for mistakes made by a servicer

• Carefully review each servicer contract to ensure that both the school and the servicer clearly understand the function(s) the servicer will perform

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Additional Resources

• Federal Student Aid Handbook− Volume 2, Chapters 3 and 5

• Dear Colleague Letter GEN-15-01− Third-Party Servicer Institutional Requirements and

Responsibilities

• FSA E-Training Website− Institutional Eligibility Training at http://fsatraining.info

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Thank you!

Anita.Olivencia@ed.govBoston Regional Office(617) 289-0130

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We Appreciate Your Feedback

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This evaluation tool provides a means to inform us of areas for improvement, and to support an effective process for listening to our customers.

Additional feedback about training can be directed to JoAnn.Borel@ed.gov.

Department of Education Contacts

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Research and Customer Care Center 800.433.7327 fsa.customer.support@ed.gov

Reach FSA 855.FSA.4FAA -- 1 number to reach 10 contact centers!

Campus Based Call Center eZ-Audit COD School Eligibility Service Group CPS/SAIG Foreign Schools Participation Division NSLDS Research and Customer Care Center G5 Nelnet Total & Permanent

Disability Team

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