Posted Date: August 1, 2016
|Author:||Sue O'Flaherty, Service Director, Program Management, Federal Student Aid|
Subject: Perkins Loan Program - Excess Liquid Capital Determinations and Timelines
Section 466(c) of the Higher Education Act requires institutions to return to the Department of Education (the Department) the Federal share of any Excess Liquid Capital (ELC) from the institution’s Federal Perkins Loan Revolving Fund (Revolving Fund). ELC is the amount of the Fund’s “Cash On Hand” that is in excess of the institution’s estimated immediate needs for the Perkins Loan Program. This statutory requirement for institutions to return ELC is not directly related to the wind-down of the Federal Perkins Loan Program.
On June 24, 2016, the Department published an Electronic Announcement on the Information for Financial Aid Professionals (IFAP) Web site informing Federal Perkins Loan Program participating institutions that the Department would be modifying the process for determining if ELC exists in an institution’s Revolving Fund. This announcement informs institutions about that modified process and the steps institutions must take to return the Federal share of ELC to the Department. This modified process also simplifies the ELC notification process.
ELC Notification Process
In early October 2016, following the submission deadline for the Fiscal Operations Report and Application to Participate (FISAP), the Department will send an e-mail to the financial aid administrator (FAA) of each institution that has ELC that must be returned to the Department. The e-mail will direct the FAA to the institution’s Self-Service page of the eCampus-Based (eCB) System. That page will include information about the institution’s ELC and a Proportional Share Worksheet (worksheet), pre-populated using information from the institution’s FISAP that will be submitted this fall. The worksheet will provide the information that was used to calculate the amount of the institution’s ELC, including the Federal share of its ELC that must be returned to the Department.
Institutions must return the Federal share of its ELC to the Department no later than November 17, 2016 using the process described in the “Returning Perkins Funds” instructions on the Campus-Based Processing Information Page on the IFAP Web site.
ELC Proportional Share Worksheet
The ELC Proportional Share Worksheet calculates the amount of any Excess Liquid Capital that must be returned to the Department and the amount that must be returned to the institution.
The ELC Proportional Share Worksheet Calculations:
Estimated Available Funds is the sum of the Revolving Fund’s cash on hand (FISAP, Part III, Sec A, Line 1.1), plus 75% of the principal and interest repaid by borrowers (FISAP, Part III, Sec B, Line 9)
Estimated Need for Funds is twice the sum of the amount advanced to students during the award year (FISAP, Part III, Sec B, Line 7) and the Administrative Cost Allowance taken from the Revolving Fund (FISAP, Part III, Sec B/Line 8)
Excess Liquid Capital is the difference between the total Estimated Available Funds less the total Estimated Need for Funds
Proportional Share Percentage is calculated using the following FISAP data:
Total Net ICC is the total ICC (FISAP, Part III, Sec A, Line 29.3) minus Repayments of ICC to the institution (FISAP, Part III, Sec A, Line 30.3)
Federal Share Percentage is the total Net FCC divided by the sum of the total Net FCC plus total Net ICC
Institutional Share Percentage is the total Net ICC divided by the sum of the total Net FCC plus total Net ICC
Institutional Share to Be Returned is the total Excess Liquid Capital multiplied by the Institutional Share Percentage
The worksheet accommodates both the changes in the ICC matching requirements that have occurred over time and any overmatching of funds by the institution. The calculation also takes into consideration any FCC that had been previously returned by the institution to the Department and any ICC that was previously repaid to the institution from the Fund.
Requests for an Adjustment
If an institution estimates that returning the ELC indicated on the worksheet would create a shortfall in the funds available for awarding students, the institution may request an adjustment to its ELC determination after considering the institution’s estimated collections.
We will be adding an ELC Adjustment Request link to the eCB System. The link will appear under the Perkins Excess Liquid Capital heading located on the left-side menu bar in eCB. To submit an ELC Adjustment Request, the institution should click on the ELC Adjustment Request link, enter a justification in the text box, and then submit the request.
Such requests must be submitted through the eCB System using the process described above. These requests must be received by October 25, 2016.
Institutions submitting an adjustment request must provide justification to the Department and include projected disbursements or estimated need for the current and upcoming award years. The institution will be notified when a decision has been finalized.
As noted, ELC calculations are based on information from FISAPs filed this fall. If you determine that one or more of the items used was misreported by your institution when submitting the FISAP, you should submit FISAP corrections as quickly as possible, so that we can perform an ELC re-calculation and place a revised ELC worksheet to your the institution’s self-service page.
For questions about the information in this announcement, contact the Campus-Based Call Center at 877/801-7168. Customer service representatives are available Monday through Friday from 8:00 A.M. until 8:00 P.M. (ET). You may also e-mail us at CBFOB@ed.gov.
Publication Date: 8/1/2016