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ACE, NASFAA Ask Education Department to Reimburse Institutions for Perkins Loan Forgiveness Costs

October 10, 2018

 

​The Perkins Loan Program, which expired in September 2017, provided low-interest loans for students with financial need and was funded through a partnership between the federal government and participating higher education institutions. 

Nearly half a million students received a Perkins loan in the last year the program was offered. These students—and others who received a Perkins loan in the past—can qualify to have their debt fully or partially cancelled, provided they work in certain public service fields such as teaching, law enforcement, or military service.

However, for the past eight years, the burden of covering the cost of these cancellations has fallen solely to colleges and universities with no assistance from the Department of Education (ED), despite a statutory requirement to do so. 

ACE and the National Association of Student Financial Aid Administrators (NASFAA) sent a letter in July to Secretary Betsy DeVos about ED’s obligation to reimburse cancellation costs to eligible institutions. The associations followed up last week with a letter​ to Under Secretary Diane Auer Jones, outlining their concerns and requesting ED meet its obligations to reimburse institutions, which is required under federal law. 

While the department’s reason for failing to make the required payments has been a lack of funds appropriated by Congress, it has consistently acknowledged that it has an obligation to do so, the associations said. In the meantime, some institutions have already spent more than $3 million of their own money meeting the federal requirement to cancel Perkins Loans. 

“Federal case law, recent Congressional action and Department of Education statements all make clear that this is an issue that needs to be addressed immediately,” the groups wrote. “The matter is increasingly urgent as the department has announced that it will release guidance on the return of Perkins Loan funds in December of this year. We strongly believe that this matter needs clarification before that occurs.”

ACE and NASFAA are urging the department to, at a minimum, delay requiring institutions participating in the Perkins Program to return these funds to the Department until the issue of the unreimbursed cancellation costs is resolved.

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