Posted Date: September 6, 2017
|Author:||John Kane, Acting Service Director, Program Management, Federal Student Aid|
Subject: Perkins Loan Program - Excess Liquid Capital Determinations and Timelines for 2017-2018
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 Revolving Fund’s “Cash On Hand” that is in excess of the institution’s estimated immediate needs for the Federal 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.
The 2017-2018 Excess Liquid Capital Notification Process
The Department will be delaying the 2017-2018 ELC notification and collection process until after the eCampus-Based System transition to the Common Origination and Disbursement (COD) System is completed next year. For more information about the system transition, refer to an August 29, 2017 Electronic Announcement posted to the Information for Financial Aid Professionals (IFAP) website.
Institutions that have ELC in their Revolving Fund will be notified about the process for requesting an adjustment and returning the Federal share in early 2018.
The ELC Proportional Share Worksheet
While the notification and collection process will be delayed, this year’s determination of ELC will be similar to last year. Information from the institution’s most recently submitted Fiscal Operations and Application to Participate (FISAP) will be used but the formula that calculates the institution’s ELC has been modified. The ELC Proportional Share Worksheet calculates the amount of any ELC 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 50% of the principal and interest repaid by borrowers (FISAP, Part III, Sec B, Line 9)
Estimated Need for Funds is 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 Institutional Capital Contribution (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 meeting the school’s Perkins Loan commitments through June 30, 2018, the institution may request an adjustment to its ELC determination after considering the institution’s estimated collections.
Institutions will have the ability to request an adjustment electronically in the new system. All adjustment requests must include a justification to the Department that includes projected disbursements through the current award year. The steps institutions must take to request an adjustment of the ELC and any applicable deadlines will be communicated after the system transition has been completed. Institutions that request an adjustment will receive a determination when the 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.
If you have 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 email us at CBFOB@ed.gov.
Publication Date: 9/7/2017