Perkins Loan Cancellations: What the Federal Government Owes Colleges and Universities

 

The Perkins Loan Program, established in 1958 as a low-interest student loan program funded through a partnership with the federal government and participating higher education institutions, expired on Sept. 30 of this year.

Perkins provided for the cancellation of outstanding balances for some borrowers, including those working in public service or serving in the armed forces. Up until FY 2010, Congress appropriated funds to reimburse colleges and universities for this purpose. 

However, these payments have now stopped. As a result, institutions are owed over $300 million for their share of cancelled loans that have not been reimbursed, as required by law.

The Department of Education has previously acknowledged their obligation to repay colleges and universities but has claimed that Congress’s ongoing failure to provide a specific appropriation prevents them from doing so. Under the Tucker Act, which has been around since 1887, federal agencies are required to honor obligations made in law regardless of whether or not specific appropriations have been made. 

Moreover, as part of the FY 2019 appropriations bill, Congress directed the department to reimburse these cancellation costs—and allowed for the use of other appropriated funds for this purpose.

The department will issue guidance to institutions regarding the repayment of those funds. It is important that institutions contact their elected representatives and the department to communicate their concerns, before the department reaches a final determination or mandates the return of Perkins funds. 

The worksheet below, developed in coordination with the National Association of Student Financial Aid Administrators (NASFAA),  will help your financial aid office calculate what your institution is owed to help communicate the impact to your campus. 


Resources

Background

Letter to member presidents from ACE President Ted Mitchell (Nov. 19, 2018) (PDF)

Perkins Loans Cancellation Reimbursements: What Colleges and Universities Need to Know (PDF)

NASFAA, ACE Urge ED to Delay a Recall of Perkins Funds and Reimburse Cancellations (Oct. 11, 2018)

ED Issues Guidance, Responds to NASFAA Letter on Wind-Down of Perkins Loan Program (Oct. 10, 2017)

Correspondence with the Department of Education

Letter from the Department of Education on delay in reporting and payment requirements (Dec. 3, 2018) (PDF)

ACE and NAFSAA followup letter to Department of Education on reimbursement for Perkins Loan cancellations (Oct. 5, 2018) (PDF)

ACE and NAFSAA letter to Department of Education on reimbursement for Perkins Loan cancellations (July 11, 2018) (PDF)

Calculations Spreadsheet

ACE prepared this Excel spreadsheet for use by campus financial aid offices to quickly determine how much institutions are owed by the federal government for unreimbursed Perkins Loans cancellations. Please contact ACE or NASFAA if you have specific questions on how to use it.