1. Nautochia Webb, Training Officer| April 16, 2016 Federal Student Aid U.S. Department of Education Perkins Loan Update 2016 Spring NJASFAA Conference

2. Agenda Perkins Loan Program Status Program Liquidation Liquidation Process NSLDS Final Tasks 2

3. Perkins Loan: It ain’t over till it’s over

4. Perkins Loan Program Program ended on September 30, 2015 No congressional action Schools could not make Federal Perkins Loans to new borrowers after September 30, 2015 DCL GEN-15-03 provided guidance 4

5. Perkins Loan Program But then the “Federal Perkins Loan Program Extension Act of 2015” happened! Signed by the President on December 18, 2015 P.L. 114-105 5

6. GEN-16-05 – Undergraduate Students 6 A school may make Perkins loans through -- To an --Who, on the date of disbursement -- If the school has awarded the student -- September 30, 2017Eligible current undergraduate student Has an outstanding balance on a Perkins loan made by the school All Direct Subsidized Stafford aid for which the student is eligible September 30, 2017Eligible new undergraduate student Does not have an outstanding balance on a Perkins loan made by the school All Direct Subsidized and Unsubsidized aid for which the student is eligible Effective 12/18/15, schools participating in Perkins Loan Program may make Perkins loans as specified below:

7. Perkins Caveats – Undergraduate Students 7 Direct Subsidized and Unsubsidized Stafford Loans Undergraduate students who are awarded a Direct Subsidized Loan and/or a Direct Unsubsidized Loan who decline one or both of the loans (or request a lesser amount) must have the full amount of the student’s Direct Loan eligibility included in the calculation of the undergraduate student’s Perkins Loan, regardless of whether the full amount was borrowed. Consolidated Perkins Loans Undergraduates who‘s Perkins Loans are paid off in full by an Consolidation Loan do not have an outstanding balance on a Perkins Loan, and therefore are treated as a new undergraduate student borrower. Subsequent Disbursements for Undergrads Eligible undergraduate student borrowers that receive disbursements of a Perkins Loan after June 30, 2017, and before October 1, 2017 for the 2017-2018 award may receive subsequent disbursements of that Perkins Loan.

8. GEN-16-05 – Graduate Students 8 A school may make Perkins loans through -- To an --If the graduate student --And the new Perkins loan will -- September 30, 2016Eligible graduate student who has received a Perkins loan before October 1, 2015 Received his or her most recent Perkins Loan from the school, for enrollment in an academic program at the school. Enable the graduate student to continue or complete the academic program for which the student received his or her most recent Perkins Loan. Effective 12/18/15, schools participating in Perkins Loan Program may make Perkins loans as specified below:

9. Perkins Caveats – Graduate Students 9 Subsequent Disbursements for Graduate Students Eligible graduate student borrowers that receive disbursements of a Perkins Loan after June 30, 2016, and before October 1, 2016, for the 2016-2017 award year, may receive subsequent disbursements of that Perkins Loan. Graduate Students Continuing or Completing an Academic Program Graduate students are considered to be continuing or completing the academic program for which they received their most recent Perkins Loan only if the first four digits of the program’s Classification of Instructional Program (CIP) code are identical to the first four digits of the CIP code for the academic program for which the student received their most recent Perkins Loan. In the case of graduate programs with different degree objectives, a graduate student meets the eligibility requirement above if the graduate student: Received his or her most recent Perkins Loan for enrollment in a program with one degree objective (e.g., masters); Then enrolled in a program with the same CIP code (the same first four digits of the CIP code); and Was enrolled in a new program that leads to a different degree objective (e.g., Ph.D).

10. GEN-16-05 – Additional Disclosures School must provide additional disclosures prior to first disbursement of Perkins including a notice and explanation stating The end to future availability of Perkins Loan Program loans; That repayment and forgiveness benefits available to Direct Loan borrowers are not available to Perkins Loan borrowers; The borrower’s option to consolidate a Perkins Loan into a Direct Consolidation Loan, including any benefit of consolidation 10

11. GEN-16-05 – Additional Disclosures(cont.) For current undergraduate borrowers, school must provide a notice and explanation Providing a comparison of the interest rates of Perkins Loans and Direct Loans Informing the borrower that the borrower has reached the maximum annual borrowing limit for Direct Subsidized Stafford Loans for which the borrower is eligible For new undergraduate borrowers, school must provide a notice and explanation Providing a comparison of the interest rates of Perkins Loans and Direct Loans Informing the borrower that the borrower has reached the maximum annual borrowing limit for Direct Subsidized and Unsubsidized Stafford Loans for which the borrower is eligible 11

12. Additional Extensions? 12 The Federal Perkins Loan Extension Act prohibits any further extensions of the Perkins Loan Program under section 422(a) of the General Education Provisions Act (GEPA). Schools may not make Perkins Loans to any student on or after October 1, 2017. However, as noted previously subsequent disbursements of a loan first disbursed to an eligible undergraduate after June 30, 2017, and before October 1, 2017, are allowed.

13. Perkins Status of Default - Orange Book 13 The Federal Perkins Loan Program Status of Default known as the Orange Book, lists each school that participated in the Perkins Loan Program during the 2014-2015 Award Year and provides a cohort default rate for each school. Rates are as of June 30, 2015 Based on data taken from the FISAP Includes all schools reporting Perkins Loan funds regardless of whether or not the schools reported advancing funds to students in FISAP, Part III, Section A, field 4. List Aggregate Default Rate for each state New Jersey schools: Pages 56 – 58 New Jersey state aggregate rate: 12.36%

14. 14 Perkins Liquidation

15. What is Perkins Liquidation? Discontinuing participation in the program, liquidating the portfolio, liquidating the cash (Fund), and closing the program at the school: Turn over loans to the Department – Assignment Account for all loans Ascertain any liabilities as a result, e.g., purchased loans Apportion remaining fund – distributional shares of remaining cash asset 15

16. When or Why Liquidate? Schools must liquidate their Perkins Loan portfolio and program fund when: Voluntarily withdrawing from the program Eligibility to participate in Perkins Loan Program is terminated by the U.S. Department of Education (ED) Not approved by ED for continued participation in the program during the school's recertification process Closing 16

17. When or Why Liquidate? Schools recommended to liquidate their Perkins Loan Portfolio and program fund when no longer advancing Perkins Loan funds to students. Schools not actively advancing loans but collecting on outstanding Perkins loans, are required to continue to return ELC each year unless and until discontinuing their participation liquidating. 17

18. 18 The Liquidation Process

19. The Process of Liquidation and Closeout The Department implemented changes in an effort to streamline and reduce burden on schools. Using the eCampus-Based (eCB) System, schools are guided through the liquidation and closeout process The Department’s new Perkins Loan Assignment System (PLAS) allows schools to submit their assignments electronically, further reducing the amount of time it takes to process assignments 19

20. What are the steps? Notify the Department of Intent to Liquidate. Assign all Outstanding Loans to the Department. Update NSLDS and Ensure All Loan Records are Properly Reported to the Department. Closeout Audit Report. Return the Federal Share of Remaining Fund. Submit Final FISAP Data. 20

21. Notify Schools must notify the Department of their intent to discontinue participation in the program by submitting the submit Intent to Liquidate via eCB. Note: Although schools may indicate they wish to discontinue their participation in Perkins during the annual submission of the FISAP by checking the “yes” box in Part II, Section B, they are still required to notify ED of intent to begin liquidation via the Perkins Liquidation and Closeout process through eCB. 21

22. eCB Perkins Liquidation Overview Schools access the eCB system at https://cbfisap.ed.govhttps://cbfisap.ed.gov Note: Only schools participating in the Federal Perkins Loan Program have access to the Perkins Liquidation module. 22

23. eCB Perkins Liquidation Overview The home page of this module provides a high level explanation of the steps involved for a school to liquidate its Federal Perkins Loan Program portfolio. 23

24. eCB Perkins Liquidation Overview When each step is completed, the bullets change to check marks providing a visual representation of the school’s place in the process. 24

25. The Intent and Closeout Form is available from within the Perkins Liquidation Module and is divided into four phases: Phase 1—Automated Intent Phase 2—Latest Reported FISAP Data Phase 3—Automated Federal- Institutional Distributional Share Calculation Phase 4—Final Closeout eCB Perkins Liquidation Overview 25

26. Phase 1. Automated Intent - Begin The first step to liquidate the Federal Perkins Loan Program is to click on the Submit Intent button. Upon clicking the Intent and Closeout Form link for the first time, only Phase 1 Automated Intent is displayed. When a school clicks the Submit Intent and Begin Process button, a confirmation is displayed. Clicking Yes confirms and submits the school’s intent to liquidate. 26

27. Once Intent is Submitted A timestamp is displayed that indicates that the intent was submitted, the user ID, and the date and time. A confirmation e-mail is sent to the FAA which also gives further information on next steps. 27

28. Phase 2. Latest Reported FISAP Data Phases 2 and 3 are now visible by the school. Phase 2 displays data from the school’s most recently submitted FISAP. This section indicates exactly where on the FISAP the data is pulled. 28 Note: If a school completes a change request to correct any of these data fields their most recently submitted FISAP or submits another annual FISAP, the new data is always reflected here as well as on the FISAP. If the data displayed in this section needs to be corrected, it must be corrected on the FISAP.

29. Assign Schools must assign all remaining loans with outstanding balances to ED. Schools should review their outstanding loans to determine that they have been maintained and administered properly so they can be assigned. to the Department. Schools must notify borrowers that their Perkins Loans are being assigned to ED and should be given at least 30-day notice, however should be submitted to ED no later than 45 days from the date the school submitted their intent to liquidate. Note: All loans that a school assigns to ED are assigned without recompense. ED will not reimburse the school’s program Fund for the loans, and all rights, authorities and privileges associated with the loan are transferred to the United States. 29

30. Assign Loans assigned to the U.S. Department of Education: Manually using paper assignment form Electronically using the Department’s new Perkins Loan Assignment System (PLAS) For ease and efficiency, it is preferred to use the automated assignment process versus paper via PLAS as it allows schools to send multiple loans in a batch process or one by one through an online, web-based form. 30

31. PLAS Schools must designate one individual at the school to gain initial access to PLASt. That person should be an already authorized-user who is able to log in to Federal Student Aid (FSA) systems with this person acting as the Institution Administrator for PLAS access. Administrators can request PLAS access for other users at their school. Once the PLAS User Access Form is completed, and access is granted from ECSI’s Federal Perkins Loan Assignment Support, users receive two emails from PLASAccess@efpls.com that contain an eight digit OPEID, Login ID, and Password credentials. With this information, users are able to log into PLAS from any computer with internet access. PLASAccess@efpls.com PLAS may be found at: http://www.efpls.com The PLAS User Guide may also be found at this site too.http://www.efpls.com 31

32. PLAS – Loan Assignment Data Entry: – PLAS is designed to reflect the exact layout of the paper Federal Perkins Loan Program Assignment Form (OMB 1845-0048). – Once batch is created, information is entered into the system via the data entry screens. – Multiple assignments can be entered and saved into the system, and will be marked with a status of Entered. Upload (Batch): Assignment information is uploaded in a pipe delimited text file and as part of the process a.zip file containing PDFs of the supporting documents for assignments are also uploaded. Overnight the system extracts the data from the files, creates a new batch with assignments, and marks the status of the assignments as Entered. ECSI Federal Perkins Loan Servicer will match the supporting documents from the.zip file with the assignments. 32

33. Acceptance Paper: When paper assignments are accepted, schools receive a mailed document identified as "Perkins Load Database Report” The report provides information on the borrower, school, and outstanding principal, interest and fees accepted for assignment by ED This is the official acceptance notice and should be retained in school records. Sent to the schools address as reflected in their PPA PLAS: Schools that use PLAS can access information about accepted and rejected assignments through the system. These reports can be viewed on-line as well as or printed. 33

34. Rejected Loans ED will provide schools with the reason(s) why a loan was rejected If schools are able to resolve the issue(s), they resubmit the debt(s) for assignment ED will work with schools to assist in resolving issues 34

35. Purchase Loans Accounts deemed unenforceable by ED are rejected for assignment and returned to schools for purchase. Once a loan is purchased, ED transfers all rights, title, and interest of the United States to the loan to the purchasing school for its own account 674.50(g) require school reimburse its program Fund for the entire portion of the outstanding balance plus any accrued interest of unenforceable loans 35

36. 36 NSLDS

37. Updating NSLDS Schools must report new loans or update data on existing loans to NSLDS Liquidation – Schools must ensure that loans are properly updated in NSLDS NSLDS must reflect that all borrower loan accounts for a liquidating schools are fully retired, accepted for assignment by ED, or purchased 37

38. Assigned & Accepted Loans Report each accepted loan as “AE” (transferred) Schools must use the code AE to transfer or assign a loan to the Department after acceptance The date in the loan status field (Field Code #262) must match the loan certification date 38

39. Purchased Loans After the program Fund is reimbursed for any defaulted and/or non-defaulted unassignable loans, schools must report the loans to NSLDS as: UC (Non-defaulted Loan Purchased by School) or UD (Defaulted Loan Purchased by School) These status codes would be reported in the Loan Status field (Field Code #263). 39

40. 40 Final Tasks

41. ED - FSA Tasks FSA monitors individual school progress during loan assignment process as well as their reporting Perkins Loan records to NSLDS. Once complete, the Federal – Institutional shares are calculated against the remaining Federal Perkins Revolving Fund. 41

42. Distributional Share Calculation - The final capital distribution from an institution’s Perkins revolving fund is made in accordance with Sec. 466(c) of the HEA. Schools must return the Federal share of their Perkins revolving fund ED 42

43. Perkins Closeout Audit Schools that end their participation in Perkins are responsible for returning any unspent funds (34 CFR section 668.14(b)(25)) Schools must: Notify the ED (34 CFR section 668.26(b)(1)) Inform ED of how they will provide for the collection of any outstanding loans (34 CFR section 668.26(b)(4)) Purchase any outstanding loans left in their Perkins portfolio or assign them to the Department (34 CFR sections 674.8(d), 674.17(a)(2), and 674.45(d)(2)) Maintain program and fiscal records of all Perkins funds since their most recent FISAP and reconcile this information at least monthly (34 CFR section 674.19(d)) 43

44. Perkins Closeout Audit - Timing The closeout audit report must be submitted within 90 days of the end of participation in the program Participation is considered to have ended once all outstanding loans in a portfolio have been fully retired, assigned and accepted by ED, or purchased Note: Schools may select an end of participation date that coincides with their their annual audit in order to meet during the institution’s normal audit process timeframe. 44

45. Submit Final Perkins Data School that end their Perkins participation must continue to file their FISAP annually until all final activity is reported Final activity consists of assigning any remaining loans with outstanding balances to ED or reimbursing the Fund for the purpose of purchasing any loans that are not accepted, and repayment of Fund capital Schools can now submit final Perkins data via the Perkins Closeout process within eCB. NEW 45

46. Official Liquidation Completion Letter After the close-out audits are received and reviewed, FSA validates that the liquidations are complete and an email messages are sent via eCB system (CBFOB@ed.gov) to the schools that their official Perkins Liquidation Letter of Completion is posted to individual schools eCB Self-Service page under Acknowledgements.CBFOB@ed.gov 46

47. Timeframes- How long does it take? Assignment Process Notify Borrowers Gather & Complete Paperwork – 30 Days 30 Days & then Submit Assignments 60 Days Audit Process Engage Audit (45 days after Program Ends). – Audit Report Submission- 90 Days NSLDS Updated, Return Federal Share, Submit Final FISAP Data – 30 Days 47 The length of the process may vary based on: Size of the portfolio to assign Resources at the school Required reconciliation, if any, between school records, FISAP, and NSLDS Time when the process begins With the streamlined processes in place, it should not take more than 180 days to liquidate and close out a Perkins portfolio and Fund.

48. Region II Training Officer 48 Nautochia Webb 646-428-3758 nautochia.webb@ed.gov Region II: NJ, NY, PR, Virgin Islands

49. Regional Contacts 49 Amber Johnson 202-377-3369 amber.johnson@ed.gov Craig Rorie 215-656-5916 craig.rorie@ed.gov Region III: DC, DE, MD, PA, VA, WV

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51. Thank You 51