Key insights
- To close out of the Perkins Loan program, every loan with an outstanding balance must be accounted for either by being assigned to the Department of Education or purchased by the institution.
- Higher ed institutions need to analyze their portfolio and consider their most advantageous time to close out.
- The Department of Education’s Assignment and Liquidation Guide can help you understand options for assigning loans with missing information.
Streamline loan assignments and keep your portfolio healthy.
The Perkins Loan Program officially ended in 2017 and, since then, many colleges and universities have let the program run its course. However, their loan portfolios are starting to dwindle, and schools are having to address the official closing of their participation in the program.
Detailed closing steps are provided in the Perkins Assignment and Liquidation Guide, and you can start with this quick breakdown of the basics:
What does your school need to do to close out of the Perkins loan program?
Account for each loan by assignment or purchase
Every loan in the Perkins program with an outstanding balance must be accounted for in one of two ways:
- Assigned to the Department of Education (ED)
- Purchased by the school
The loan purchase price includes the outstanding principal plus accrued interest. Given some loans could be more than 20 years old, the accrued interest could be substantial. Work with a professional advisor who can help assess your institution’s situation and build a beneficial exit plan.
Correctly assign loans to ED
To assign a loan to ED, you must complete the assignment manifest and Perkins assignment form and submit them with the supporting documentation.
Required documentation includes a copy of the original promissory note, the complete repayment history, and if applicable, judgement and bankruptcy information. If these documents are not included, ED will reject the loan.
But what if you can’t find that promissory note signed 30 years ago, or if you switched third-party services and some of the repayment history disappeared? Will your institution have to purchase this loan?
Not necessarily. There are remedies for alternative documentation defined in the Perkins Assignment and Liquidation Guide to help you understand options for assigning loans with missing information.
Perform final calculations and audits
Once all loans are assigned or purchased, schools must calculate the amount of remaining funds to return to ED by prorating the federal and institutional capital contributions.
Lastly, the school must complete a Perkins closeout audit.
How CLA can help with your institution’s loan portfolio
CLA’s higher education professionals have helped schools with the loan assignment process and have performed many Perkins closing audits in recent years. We offer portfolio analysis, regulatory guidance, and financial reporting and compliance support to help your institution maintain a strong loan portfolio.
Contact us
Streamline loan assignments and keep your portfolio healthy. Complete the form below to connect with CLA.