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Education Department Announces Delay in Recall of Perkins Funds

November 28, 2018

 

​The Department of Education (ED) has announced a delay in the recall of Perkins Loan funds from colleges and universities while it explores the need to reimburse institutions for their share of cancelled loans for some borrowers.

Jeff Appel, Federal Student Aid’s Director of Policy Liaison and Implementation, announced the delay Tuesday at the 2018 Federal Student Aid Training Conference in Atlanta.

The Perkins Loan Program, which expired on Sept. 30 of this year, provided for the cancellation of outstanding balances for certain borrowers working in public service or serving in the armed forces. Congress historically appropriated funds to reimburse colleges and universities for this purpose, but stopped doing so in 2010. The best estimate is that institutions are owed over $300 million for their share of canceled loans. 

Under the Tucker Act, a relatively obscure nineteenth-century law, it appears the federal government is required to compensate institutions even though Congress has not appropriated funds. In an FY 2019 appropriations bill, Congress instructed ED to address the issue.

ACE and the National Association of Financial Aid Administrators (NASFAA) have been seeking such a delay while ED decides what to do. 

In letters sent in July and again in October, ACE and NASFAA asked the department to publicly announce its intentions to resume reimbursing institutions for canceled Perkins Loans, or to delay requiring institutions to return any funds to the department until the issue is resolved.

For more information, including a downloadable spreadsheet to help institutions estimate how much they are owed by the federal government, click here​

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