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Department of Education reminds institutions about assignment of defaulted Perkins Loans
May 31, 2023
Some Perkins Loans may appear to be gone due to default, but those loans shouldn't be forgotten.
In a May 26 Electronic Announcement, the Department of Education reminded institutions about the requirement to assign to the Department any loans that have been in default for two years. The deadline for assigning those loans is June 30, 2023.
According to the Department, if an institution still holds any Perkins Loans that have been in default for more than two years and there are no current collections or collection records for these loans, the loans must be submitted for assignment as soon as possible to allow time for processing. Institutions with an acceptable collection record on defaulted Perkins loans are not required to assign those loans to the Department. However, the Department said institutions should notify the Department that documentation showing an acceptable collection record is available upon request and submit such documentation to the Department of Education for review if and when requested.
“If it is determined that an institution has shown insufficient effort assigning, purchasing, or providing acceptable collection records to the Department for review, a warning letter may be sent to the institution’s financial aid office as well as to the campus CEO/President reminding them of the requirement to take action on these loans by the June 30, 2023, deadline,” the Department said in the announcement. “Continued failure to assign these loans could result in a focused program review to assess the institution’s reasons for non-compliance with a mandate set by the Secretary and a school’s Title IV administrative capability.”
Institutions that are facing specific challenges in meeting the deadline can reach out to Federal Student Aid to discuss an appropriate timeline to assign the loans. Loans that are missing the required promissory note or any alternate documentation that can be used to assign the loan(s), the school must purchase the loan.
Institutions with questions should contact the COD School Relations Center by calling 1-800-848-0978 sending an email to CODSupport@ed.gov.