NASFAA Mention: Colleges Ask Education Department to Reimburse Forgiven Loans

"College and financial aid administrators are asking the Education Department to repay schools that spent as much as $400 million forgiving student loans through a now-defunct program," according to Bloomberg Government.

"Perkins Loans were administered and serviced by colleges until Congress allowed the program to expire in September 2017. Under the initial agreement, the schools were required to discharge the loans of students who went into public service, such as teaching, law enforcement, or the military. After colleges forgave the student loans, the Education Department was supposed to reimburse them.

That hasn’t happened since fiscal 2010, according to a letter to the department from two higher education groups: the American Council on Education and the National Association of Student Financial Aid Administrators.

More than 1,000 schools participated in the Perkins Loan program and some are out as much as $8 million, said Jonathan Fansmith, director of public affairs with the American Council on Education. The amount owed to schools has been estimated at anywhere between $250 million to $400 million, with no exact amount known.

'At larger schools, $3 million or $5 million might look relatively small in the overall amount of revenue, but these are financial aid dollars,' Fansmith said. 'At the very least, there’s that much less money to help low income students afford college.'

The Education Department is working on reviewing the situation and responding to the letter, said spokeswoman Liz Hill.

Adding urgency is the department’s plan to release guidance in December on how schools will return the federal portion of Perkins Loan funding. The groups are asking the department either to allow the schools to keep federal funds equal to the amount they are owed or delay the deadline to return funds until the matter can be addressed."

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 10/22/2018

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