ED Officially Announces Delay in Perkins Loan Fund Recall

By Allie Bidwell, NASFAA Senior Reporter

The Department of Education (ED) last week responded to requests from NASFAA and the American Council on Education (ACE) to reimburse institutions for Perkins Loans cancellations, which it has failed to do since fiscal year (FY) 2010. In the letter, ED again said it is likely unable to do so without appropriated funds from Congress, but that it would delay asking schools to begin returning their funds to allow for further time to resolve the matter.

NASFAA and ACE wrote to ED in October, saying that due to the lack of reimbursements some schools have had to use more than $3 million of their own funds to meet cancellation requirements. Meanwhile, the federal government has accumulated millions of dollars that it owes to colleges over this period of time, the groups wrote in a previous letter regarding the same issue in July.

The groups emphasized in their most recent letter that “the failure of Congress to appropriate funds to enable an agency to satisfy a mandatory statutory obligation does not allow an agency to avoid meeting their obligations under the law.”

In its response, ED said it is “closely monitoring what, if any, options [ED] has to address the reimbursements,” but that without funds from Congress, “full and immediate reimbursement is likely not possible.” However, the agency acknowledged in the letter that it would delay requiring institutions participating in the Perkins loan program to return any funds to ED until the issue of cancellation costs is resolved.

“Because it will take us additional time to determine what, if anything, can be done to remedy this problem short of a direct appropriation, we will be delaying the cash on hand reporting and payment requirements,” the letter said. “We are working to identify a solution as quickly as possible.”

NASFAA views this as a positive step made in good faith and will continue to work with the Department on this issue. In the meantime, NASFAA has created a tool schools can use to estimate how much they are owed by the federal government.

 

Publication Date: 12/10/2018


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