S ESSION T ITLE I T ’ S T IME TO L IGHT THE L IGHTS 2016 ILASFAA A NNUAL C ONFERENCE A PRIL 6 – 8, 2016, H ILTON, L ISLE, IL T HE S TATUS OF THE P ERKINS L OAN P ROGRAM B RIGET B IERNAT J ANS D E P AUL U NIVERSITY 2016 ILASFAA A NNUAL C ONFERENCE A PRIL 6 – 8, 2016, H ILTON, L ISLE, IL

The Perkins Loan Program Where were we? Where are we now? Where are we going? What if we want out? 2016 ILASFAA Annual Conference 2

History National Defense Education Act (NDEA) 1958 US was falling behind in technology US was losing the space race to the Soviet Union Increase in computers caused national mathematician shortage Goal was to increase specific defense-oriented personnel, and aid the large numbers now attending colleges 2016 ILASFAA Annual Conference 3

History National Defense Education Act (NDEA) Funding went to schools to support math, science and foreign language programs Specifically excluded Latin and Greek Funded graduate fellowships to increase the number of college professors Created the National Defense Student Loan (NDSL) Originally a grant, but members of Congress worried about giving a “free ride” 2016 ILASFAA Annual Conference 4

History National Defense Education Act (NDEA) Required signing a loyalty statement All beneficiaries had to complete an affidavit disclaiming belief in the overthrow of the U.S. government AAUP and 153 institutions protested the loyalty statement Repealed in 1962 by JFK 2016 ILASFAA Annual Conference 5

History Renamed in 1986 in memory of Rep. Carl D. Perkins, KY Member of Congress for 35 Left a legacy supporting education, technical training and the under-privileged Carl C. Perkins 2016 ILASFAA Annual Conference 6

The Perkins Loan Program Need-based loan Exceptional need, as defined by the college Fixed 5% interest rate 9-month grace period 10-year repayment Eligible for Federal Loan Cancellation Teachers, law enforcement, Peace Corps Not eligible for Public Service Loan Forgiveness unless consolidated 2016 ILASFAA Annual Conference 7

The Perkins Loan Program Eligible students Citizens or eligible non-citizens Not in default, all other eligibility concerns Grad = $8,000 annual limit ($60,000 cumulative) Undergrad = $5500 annual limit ($27,500 cumulative) 2016 ILASFAA Annual Conference 8

The Perkins Loan Program Started with contributions by ED and individual institutions No federal capital contributions since FY2010 New loans funded through collections of existing loans About 1700 schools participating Average loan amount in the last few years is roughly $2, ILASFAA Annual Conference 9

The Unsinkable Loan Program Presidents Carter, Clinton and G.W. Bush all proposed ending the program But Congress rejected those efforts 2016 ILASFAA Annual Conference 10

The Unsinkable Loan Program Authority to make new loans ended September 30, 2014 Received automatic 1-year extension under the General Education Provision Act (GEPA) Allowed for new borrowers for AY only, as long as funds were disbursed by the deadline Allowed for limited options to make loans to grandfathered students in future years Had to have Perkins before AY Same academic program Up to five more years to continue or complete program 2016 ILASFAA Annual Conference 11

The Unsinkable Loan Program House passed legislation to extend the program on September 29, 2015 Senate failed to take action on the bill Let the program lapse Senator Lamar Alexander Effort to simplify and streamline the federal student loan programs 2016 ILASFAA Annual Conference 12

The Unsinkable Loan Program Resurrected in December 2015 Federal Perkins Loan Program Extension Act of 2015 Senator Lamar Alexander Framed as a managed shut-down of the program Gives Congress two years to find a long-term solution Anticipate reauthorization of the Higher Education Act by then 2016 ILASFAA Annual Conference 13

The New Terms Eliminates the grandfathering provisions from DCL GEN New undergraduate borrowers can get Perkins Loans through September 30, 2017 Eligibility for grad students is more limited 2016 ILASFAA Annual Conference 14

The New Terms Undergraduate Students Current Perkins borrowers Must first award the student’s Direct Subsidized Stafford Loans before awarding Perking They don’t have to borrow it, just be awarded No concerns about whether the student’s CIP code No timing issues for and AYs For AY, must make first disbursement on or before September 30, 2017 Subsequent disbursements for that AY are fine 2016 ILASFAA Annual Conference 15

The New Terms Undergraduate Students New Perkins borrowers Must first award the student’s Direct Subsidized AND Unsubsidized Stafford Loans before awarding Perking They don’t have to borrow it, just be awarded No concerns about whether the student’s CIP code No timing issues for and AYs For AY, must make first disbursement on or before September 30, 2017 Subsequent disbursements for that AY are fine 2016 ILASFAA Annual Conference 16

The New Terms Who is a “current” borrower? Outstanding Perkins Loan balance at your institution Who is a “new” borrower? No Perkins history at all Outstanding Perkins Loan at another institution Loan borrowed previously at your school has been paid off through consolidation 2016 ILASFAA Annual Conference 17

The New Terms Graduate Students Continuing borrowers only Must have received a Perkins Loan at your institution before October 1, 2015 The Perkins Loan will enable the student to continue or complete the program for which he received the most recent Perkins Loan First four digits of the CIP code must match Different degree objective is acceptable Masters degree to PhD 2016 ILASFAA Annual Conference 18

The New Terms Graduate Students One less year than undergraduate students No timing issues for AY For AY, must make first disbursement on or before September 30, 2016 Subsequent disbursements for that AY are fine 2016 ILASFAA Annual Conference 19

The New Terms Must provide additional disclosures Program is ending Repayment and forgiveness benefits are not the same as Direct Loans Option to consolidate Comparison of interest rate and when a student has reached maximum sub eligibility for current borrowers maximum sub and unsub eligibility for new borrowers 2016 ILASFAA Annual Conference 20

The New Terms Act prohibits any further extensions of the Perkins Loan Program Additional provisions related to the disposition of schools’ Perkins Loan Revolving Funds 2016 ILASFAA Annual Conference 21

What about the Revolving Funds? Beginning October 1, 2016 Each school must pay to ED a certain portion of: the federal share of the balance of its Perkins Loan funds, and the Perkins student loan payments, including principal and interest, received by the institution Waiting for more guidance to be released by ED 2016 ILASFAA Annual Conference 22

The Exit Process Liquidation Process by which a school ends participation in the Federal Perkins Loan Program Liquidate All outstanding Perkins, NDSL and Defense Loans Perkins Revolving Fund 2016 ILASFAA Annual Conference 23

The Exit Process Why liquidate? Withdrawing from Perkins Program Eligibility terminated by ED School closing Also urged to do so if no longer advancing loan funds to students Liquidation process could take six months Reconciliation with FISAP, school records, NSLDS Why assign? ED has better resources to track defaulters 2016 ILASFAA Annual Conference 24

The Exit Process Is there a down side to assigning/liquidating? When loans are assigned to ED, there is no recompense to the school All funds collected by ED are property of the US government 2016 ILASFAA Annual Conference 25

The Exit Process There is some discussion in Washington about requiring schools to relinquish servicing responsibilities NASFAA is advocating that the program retain maximum flexibility for schools Stay tuned for more guidance 2016 ILASFAA Annual Conference 26

The Exit Process To assign/liquidate loans Must review outstanding loans to determine if they were maintained and administered properly Otherwise, they can’t be assigned to ED Must be properly accounted for in NSLDS Fully retired (paid in full) Purchased by the school Accepted for assignment by ED and transferred 2016 ILASFAA Annual Conference 27

The Exit Process The Perkins Loan Assignment System Complete a web-based assignment form Securely upload supporting documents Can submit either batch files or individual loans Search, view or edit loan assignment information View reports of loans accepted or rejected for assignment 2016 ILASFAA Annual Conference 28

The Exit Process The Perkins Loan Assignment System PDPA must request access to the PLAS User access form is available at the same URL Use your TFA token User Manual available, too Same website for borrowers whose loans have been assigned 2016 ILASFAA Annual Conference 29

Any experiences assigning loans to ED? 2016 ILASFAA Annual Conference 30

Resources Perkins awarding guidance DCL GEN Campus-Based Processing Information Perkins Loan Assignment and Liquidation Guide Excess Liquid Capital DCL GEN ILASFAA Annual Conference 31

Resources Ending Your School’s Participation in the Federal Perkins Loan Program 2015 FSA Training Conference, Session 6 Assigning Federal Perkins Loans to the Department of Education 2015 FSA Training Conference, Session ILASFAA Annual Conference 32

Questions??? 2016 ILASFAA Annual Conference 33

Contact Information Briget Jans ILASFAA Annual Conference 34