In 2017, the Department of Education began the process of sunsetting the Federal Perkins Loan program. While schools still have the option to continue servicing their Perkins portfolios, eliminating non-performing loans is in your institution’s best interest. Here are answers to some of the most common questions we get about assigning your past-due Perkins Loans to the government.
Why Assign Your Most Severely Delinquent Loans?
The government has collection options not available to schools (like wage garnishment and litigation through the Justice Department), so they encourage schools to assign these loans back to them. This can free you of the ongoing costs associated with servicing and collecting on these old delinquent accounts.
What Does Assignment Mean?
Assigning a loan means you’re transferring all rights and responsibilities for servicing and collecting them to the government. All monies collected after assignment go to the government and not your school – but in many cases you’re spending more in administrative costs on uncollectible accounts than you can ever hope to recover.
Is Assignment a Requirement?
Some schools have received notices from the Department of Education requiring them to assign severely past-due Perkins Loans back to the government. Even if you haven’t yet received one of these letters, you can still assign delinquent loans and achieve a clean Perkins portfolio.
What’s the Process for Assigning Loans?
Schools can assign any Perkins Loan to the Department of Education at any point during the program year. Unfortunately, preparing the assignment package can involve a lot of paperwork and staff time. With each assigned loan comes borrower notifications, contacting collections agencies, creating forms, generating a loan history, and more.
This is why partnering with ECSI to assign your underperforming loans to FSA can prove beneficial. When you partner with ECSI, you send us a list of students’ names and Social Security Numbers, and we run a program to generate the forms for you - 1845s, memos, AND histories. We also send first notification letters before your assignment package has been mailed.
We send the files securely to you to print and assemble your package to be mailed to FSA… unless you use our Enhanced Government Assignment Service, in which case we assemble the package after you ship us your prom notes! Whether you use the Standard or Enhanced process, we send second notification letters to your borrowers informing them of their loan(s) being submitted to FSA.
How Can You Reduce Your Administrative Burden?
Working in-house on Perkins Loan assignments can be incredibly time-consuming - you have to manually generate the 1845 assignment forms, memos, and histories on your own, along with crafting notification letters to your borrowers. This is in addition to searching for physical prom notes and downloading any that are stored digitally.
ECSI does the heavy lifting for you - whether you prepare and mail the package or utilize our Enhanced Government Assignment Service, where we mail your assignments to the Department, we simplify the process - saving you and your team valuable time and resources. What more can you ask for in a servicing partner?