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Session 7 Assigning Federal Perkins Loans to the Department of Education And other processes Session 7 Assigning Federal Perkins Loans to the Department of Education And other processes that have been developed for liquidation and closeout. Pat Stephenson | Dec. 2015 U. S. Department of Education 2015 FSA Training Conference for Financial Aid Professionals

When or Why Should a School Liquidate? A school must liquidate its Perkins Loan When or Why Should a School Liquidate? A school must liquidate its Perkins Loan portfolio and program fund, when it: • Voluntarily withdraws from the Perkins Loan Program • has had its eligibility to participate in the Perkins Loan Program terminated by the Department • has not been approved by the Department for continued participation in the Perkins Loan Program during the school's recertification process or • is closing 2

When or Why Should a School Liquidate? A school is urged to liquidate its When or Why Should a School Liquidate? A school is urged to liquidate its Perkins Loan Portfolio and program fund if it is no longer advancing Perkins Loan funds to students. Note: While currently the Department cannot require schools liquidate, schools are required to return Excess Liquid Capital (ELC). Schools that haven’t any need and have cash in their Fund will be required to liquidate their Fund (cash on hand) by default of the instruction in a new Dear Colleague Letter (DCL GEN-15 -19) published on September 29, 2015. If these schools continue to collect, they will be required to continue liquidating their fund each year until they choose to discontinue their participation by following the process of program liquidation. 3

What is Perkins Liquidation? It is discontinuing participation in the program, liquidating the portfolio, What is Perkins Liquidation? It is 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 • 4

e. CB System of Record for Perkins The e. Campus-Based (e. CB) system is e. CB System of Record for Perkins The e. Campus-Based (e. CB) system is the system of record for all schools’ collective Perkins portfolio. The Department implemented the automated Perkins liquidation process in August 2015. The goal was to streamline the liquidation process for schools that are liquidating their Perkins portfolio and to provide an accessible tracking system for both schools and FSA to view and follow through the eventual closeout of the school’s Federal Perkins Loan Program. 5

e. CB Perkins Liquidation Overview Schools access the e. CB system at https: //cbfisap. e. CB Perkins Liquidation Overview Schools access the e. CB system at https: //cbfisap. ed. gov Note: Only schools participating in the Federal Perkins Loan Program have access to the Perkins Liquidation module. 6

e. CB Perkins Liquidation Overview The home page of this module provides a high e. CB 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. 7

e. CB Perkins Liquidation Overview When each step is completed, the bullets change to e. CB 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. 8

e. CB Perkins Liquidation Overview The Intent and Closeout Form is available from within e. CB Perkins Liquidation Overview 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 9

Phase 1. Automated Intent - Begin When a school decides to liquidate its Federal Phase 1. Automated Intent - Begin When a school decides to liquidate its Federal Perkins Loan Program, the first step is to submit their intent by clicking on the Submit Intent button. SUBMIT INTENT and BEGIN PROCESS When a school clicks the Intent and Closeout Form link for the first time, only Phase 1 Automated Intent is displayed. 10

Phase 1. Automated Intent When a school clicks the Submit Intent and Begin Process Phase 1. Automated Intent 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. 11

Once Intent Submitted— A timestamp is displayed that indicates that the intent was submitted, Once Intent 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. 12

Phase 2. Latest Reported FISAP Data Phases 2 and 3 are now visible by 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. 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. 13

Assignment Process Schools must assign all remaining loans with outstanding balances to the Department. Assignment Process Schools must assign all remaining loans with outstanding balances to the Department. Borrowers should be given at least 30 -day notice, but loans should be submitted to the Department not later than 45 days from the date the school submitted their intent to liquidate to the Department. Note: Upon acceptance of the loan by the Department, the borrower will automatically be granted a 60 -day administrative forbearance on his or her loan. The administrative forbearance is to alleviate any undo hardship upon the borrower for the interim that the loan is being assigned and transferred to the Department. 14

Assignment Process How are loans assigned to the Department? • Manually using paper assignment Assignment Process How are loans assigned to the Department? • Manually using paper assignment form or • Electronically using the Department’s new Perkins Loan Assignment System (PLAS) • 15 This web-based option allows schools to send multiple loans in a batch process or one by one through an online, web-based form

PLAS www. efpls. com To use PLAS, the school must designate one individual at PLAS www. efpls. com To use PLAS, the school must designate one individual at the school to gain access to PLAS first. The designated person should be an already authorized-user able to log in to Federal Student Aid (FSA) systems. The designated person will act as the Institution Administrator for PLAS access and can request access for other PLAS users at the school. Get Access! www. efpls. com 16

PLAS Once the PLAS User Access Form is completed, and access is granted from PLAS Once the PLAS User Access Form is completed, and access is granted from ECSI Federal Perkins Loan Assignment Support, users receive two emails from [email protected] 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. 17

PLAS - Data Entry Method Overview These steps are a broad overview of the PLAS - Data Entry Method Overview These steps are a broad overview of the Loan Assignment Data Entry Method. For further instructions on how to use PLAS refer to the PLAS User Guide at www. efpls. com. Log In to PLAS. 2. Create a Batch and Enter Loan Assignments 1. The system is designed to reflect the exact layout of the paper Federal Perkins Loan Program Assignment Form (OMB 1845 -0048). Once the user has created a batch, he or she will enter the information 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. 18

PLAS - Data Entry Method Overview 3. Upload Supporting Documents Supporting documentation must be PLAS - Data Entry Method Overview 3. Upload Supporting Documents Supporting documentation must be provided with the loan assignment. The user has the ability to upload supporting documentation for each of the loan assignments, or mail supporting documents to ECSI Federal Perkins Loan Servicer. Note: Even if promissory notes are uploaded in the system, all hard copy original or certified copy promissory notes must be mailed to ECSI Federal Perkins Loan Servicer. 4. Execute Batch Validation All batches that are entered into the system must be validated to verify that all of the required information is correct. View the manifest within the batch to determine if the assignment passes the system validation. If PLAS identifies errors in an assignment during the validation process, the assignment’s status will be marked as School Pending. Correct any validation errors and validate the batch again. Once an assignment has successfully passed validation, the status will change to Submitted. 19

PLAS - Data Entry Method Overview 5. Print the Manifest Print one manifest per PLAS - Data Entry Method Overview 5. Print the Manifest Print one manifest per batch to accompany all hard copy original or certified copy promissory notes, and mail to ECSI Federal Perkins Loan Servicer. The user will need to mail supporting documentation that was not uploaded to the system. All documentation must be mailed within five (5) business days, once the status of the assignment has changed to Submitted. 20

PLAS - Data Entry Method Overview 6. ECSI Federal Perkins Loan Servicer Validation A PLAS - Data Entry Method Overview 6. ECSI Federal Perkins Loan Servicer Validation A manual validation process occurs once ECSI Federal Perkins Loan Servicer receives hard copy original or certified copy promissory notes and other supporting documents. If the assignments pass manual validation, the status will change to Accepted. If the assignments fail manual validation, then the status will change to ECSI Pending. ECSI Federal Perkins Loan Servicer staff will contact the submitting institution promptly by phone to verify or correct the information. The ECSI Federal Perkins Loan Servicer staff member will contact the person listed as the Authorized Institution Official in Section B on the Institutional Certification Form. Once the institution corrects the discrepancies, the status will change to Accepted. The Department officially accepts assignments in Accepted status, and ECSI Federal Perkins Loan Servicer will begin servicing the loan. 21

PLAS – Upload (Batch) Method Overview These steps provide a broad overview of the PLAS – Upload (Batch) Method Overview These steps provide a broad overview of the Loan Assignment Upload Method. For further instructions on how to use PLAS refer to the PLAS User Guide at www. efpls. com. Log In to PLAS. 2. Upload Files to Create Assignments 1. The user will upload assignment information in a pipe delimited text file and upload a. zip file that contains PDFs of the supporting documents for the assignments to the system. In an overnight process, 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. 22

PLAS – Upload (Batch) Method Overview Execute Batch Validation 3. All batches that are PLAS – Upload (Batch) Method Overview Execute Batch Validation 3. All batches that are entered into the system must be validated to verify that all of the required information is correct. View the manifest within the batch to determine if the assignment passes the system validation. If PLAS identifies errors in an assignment during the validation process, the assignment’s status will display a status of School Pending. Correct any validation errors and validate the batch again. Once an assignment has successfully passed validation, the status will change to Submitted. Print the Manifest 4. Print one manifest per batch to accompany all hard copy original or certified copy promissory notes, and mail to ECSI Federal Perkins Loan Servicer. The user will need to mail the supporting documentation that was not uploaded to the system. All documentation must be mailed with five (5) business days, once the status of the assignment has changed to Submitted. 23

PLAS – Upload (Batch) Method Overview ECSI Federal Perkins Loan Servicer Validation 5. A PLAS – Upload (Batch) Method Overview ECSI Federal Perkins Loan Servicer Validation 5. A manual validation process occurs once ECSI Federal Perkins Loan Servicer receives hard copy original or certified copy promissory notes and other supporting documents. If the assignments pass manual validation, the status will change to Accepted. If the assignments fail manual validation, then the status will change to ECSI Pending. ECSI Federal Perkins Loan Servicer staff will contact the submitting institution promptly by phone to verify or correct the information. The ECSI Federal Perkins Loan Servicer staff member will contact the person listed as the Authorized Institution Official in Section B on the Institutional Certification Form. Once the institution corrects the discrepancies, the status will change to Accepted. The Department officially accepts assignments in Accepted status, and ECSI Federal Perkins Loan Servicer will begin servicing the loan. 24

Assignments Complete? Schools must ensure that its loans are properly accounted for and updated Assignments Complete? Schools must ensure that its loans are properly accounted for and updated in NSLDS. Ultimately, FSA will need to verify that all loans have been updated and none remain open with the school. 25

Assignments Complete? FSA monitors each school’s progress in completing the Perkins Loan Assignment process Assignments Complete? FSA monitors each school’s progress in completing the Perkins Loan Assignment process and reporting Perkins records to NSLDS. 26

Phase 3: Distributional Share Calculation FSA records the total Outstanding Principal Balance (OPB) + Phase 3: Distributional Share Calculation FSA records the total Outstanding Principal Balance (OPB) + interest required to purchase any remaining, open loans (if applicable). Schools are liable for any un-assignable loans. If none remain to be purchased, FSA would enter $0 in Total OPB + interest field and submits the form back to the school by saving the entry. Phase 3 of the closeout form within e. CB opens to the school and it is at this point that the school is required to enter the current Cash on Hand balance from their school’s Perkins Fund. 27

Phase 3: Distributional Share Calculation The amount entered in the Current Cash on Hand Phase 3: Distributional Share Calculation The amount entered in the Current Cash on Hand Balance is edited against the previously reported Cash on Hand on the FISAP. If the amount is significantly less than previously reported, the edit displayed at the top of the screen and an explanation is required in the text box displayed at the bottom of the Phase 3 section of the form. 28

Phase 3: Distributional Share Calculation Upon entering the explanation (if applicable) and clicking the Phase 3: Distributional Share Calculation Upon entering the explanation (if applicable) and clicking the Submit button, a confirmation box is displayed. The school confirms and proceeds by clicking Yes. 29

Phase 3: Distributional Share Calculation Once confirmed: • A timestamp is displayed at the Phase 3: Distributional Share Calculation Once confirmed: • A timestamp is displayed at the bottom of the Phase 3 fields that indicates that the Current Cash on Hand balance was submitted, the user ID, and the date and time • The Federal Share Owed the US Department of Education is calculated • And, Phase 4 is displayed but not yet open for data entry 30

Phase 3: Distributional Share Calculation If there is a Federal Share Owed, an automated Phase 3: Distributional Share Calculation If there is a Federal Share Owed, an automated e-mail is sent from the e. CB system ([email protected] gov) to the school and the Department of Education’s (ED’s) official letter indicating that the Federal Share Owed is posted to the school’s e. CB Self-Service page under Acknowledgements. 31

Phase 4: Final Closeout – Final Data If there is no Federal Share Owed, Phase 4: Final Closeout – Final Data If there is no Federal Share Owed, or once a school’s remittance of Federal Share Owed has been verified, the fields in Phase 4 are available for data entry. This phase of the process streamlines the closeout process as it takes the place of the official submission of Part III of the Final FISAP by the school for purposes of Perkins closeout. 32

Phase 4: Final Closeout – Final Data Upon entering the data and clicking the Phase 4: Final Closeout – Final Data Upon entering the data and clicking the Submit button, a confirmation box is displayed. The school confirms the data entry and proceeds by clicking Yes. Once confirmed, a timestamp is displayed at the bottom of the Phase 4 that indicates that the Final Closeout Report was submitted, the user ID, and the date and time. 33

Review of Steps – What’s Next Thus far, the school has completed the following Review of Steps – What’s Next Thus far, the school has completed the following steps: • Submitted Intent • Assigned all outstanding loans • Has their closeout audit lined up with the auditor* • Updated NSLDS • Audit conducted* • Returned Federal Share of remaining Fund • Submitted final FISAP data *34 CFR 668. 26 requires a school to submit a letter of engagement for an independent audit of all funds that the school received under the program to the Secretary within 45 days after the school’s participation ends. A school’s participation is considered to have ended once all outstanding loans in its portfolio have been fully retired, assigned and accepted by the Department, or purchased. Note: not-for-profit schools that qualify and report annually under the Single Audit Act may elect not to have an independent Perkins audit done, and instead include the Perkins close-out audit with the schools regular annual audit. 34

Closeout Audit Once the closeout audit requirement has been met, FSA validates that the Closeout Audit Once the closeout audit requirement has been met, FSA validates that the Perkins Liquidation is complete and an e-mail message is sent from the e. CB system ([email protected] gov) the school that the Department’s official Perkins Liquidation Letter of Completion is posted to the school’s e. CB Self-Service page under Acknowledgements. 35

Official Closeout Letter 36 Official Closeout Letter 36

Questions? 37 Questions? 37