Posted Date: July 11, 2018
|Author:||Federal Student Aid|
Subject: Perkins Loan Program – Federal Perkins Loan Revolving Fund Distribution of Assets and Timelines for 2018–19
Author: Federal Student Aid Subject: Perkins Loan Program – Federal Perkins Loan Revolving Fund Distribution of Assets and Timelines for 2018–19
Section 466(a) of the Higher Education Act of 1965, as amended, requires a capital distribution (Distribution of Assets) of the balance of an institution’s Perkins Loan Revolving Fund (Perkins Fund). The Distribution of Assets from the Perkins Loan Revolving Fund process replaces the existing Excess Liquid Capital process as part of the wind-down of the Federal Perkins Loan Program.
The Department of Education (the Department) will require an initial distribution of assets from the institution’s Perkins Fund for the 2018–19 Award Year. Under Section 466(b), beginning with the 2019–20 Award Year and for all subsequent award years, the Department will require a capital distribution from the institution’s Perkins Fund on an annual basis for institutions that continue participating in the Perkins Loan Program. Institutions must return to the Department the federal share and return to the institution the institutional share of an institution's Perkins Fund.
Institutions participating in the Perkins Loan Program by either servicing their loans or contracting with a third-party servicer for the servicing of their loans will be notified of the amount of federal share and institutional share that must be returned and the deadline by which these funds must be returned.
The 2018–19 Distribution of Assets Notification Process
After the FISAP is submitted through the Common Origination and Disbursement (COD) System by October 1, 2018, the Department will send a notification to institutions that have cash in the institution’s Perkins Fund subject to the distribution of assets process. This notification will include the deadline and instructions to remit only the federal share through G5. The institutional share must be removed from the Perkins Fund and returned to the institution. For this year, due to additional system updates, we will delay the notification to schools until December.
The Distribution of Assets Proportional Share Worksheet
Determination of an institution’s Distribution of Assets uses information from the institution’s most recently submitted Fiscal Operations and Application to Participate (FISAP). Using the Cash on Hand, the Proportional Share formula will determine the federal and institutional shares of the institution’s Perkins Fund. The Distribution of Assets Proportional Share Worksheet calculates the amount of cash in the Perkins Fund that must be returned to the Department and the amount that must be returned to the institution.
The Distribution of Assets Proportional Share Worksheet Calculations:
Cash on Hand in the Perkins Fund (FISAP, Part III, Sec A, Line 1.1)
Proportional Share Percentage is calculated using the following FISAP data:
Federal Share to be Returned to the Department is the total Cash on Hand multiplied by the Federal Share Percentage
Institutional Share to Be Returned to the institution is the total Cash on Hand 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 Perkins Fund.
Requests for an Adjustment
Institutions are only permitted to charge to the Perkins Fund costs of litigation incurred in collection of the principal and interest on loans not already reimbursed from the Perkins Fund or from payments by the borrower. You may refer to 34 CFR 674.47(e) for the limitations on costs charged to the Fund.
If an institution believes that returning both the federal share and institutional share indicated on the worksheet would create a shortfall in the funds available for meeting the school’s Perkins Loan permissible collection costs through June 30, 2019, the institution may request an adjustment to its Distribution of Assets through the COD System.
All adjustment requests must provide a justification to the Department that includes the reason the institution feels it will not have sufficient funding through June 30, 2019. Institutions that request an adjustment will receive a determination when the decision has been finalized.
As noted, the Distribution of Assets calculations will be 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 prior to requesting an adjustment.
If you have questions about the information in this announcement, contact the COD School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.
Publication Date: 7/11/2018