1-16: Perkins (NDSL) Student Loan Accounting
A. The purpose of this procedure is to define responsibility and duties of the various accounting procedures in order to provide full compliance with the Department of Education guidelines and regulations for the accounting of the Perkins Student Loan Program.
B. The scope of this instruction is limited to accounting for the Perkins Federal Capital Contribution (FCC), the Fort Lewis College Matching, and the administration and accounting for loans advanced under the Perkins (NDSL) Program.
The provisions and regulations of the loan fund are defined in the publication 34 CFR - Compilation of Student Aid Regulations, Part 674. The Federal Student Aid Handbook, Volume 5 (accessed at www://ifap.ed.gov) is referenced for interpretations and annual updates of the regulations and provisions. Eligibility for loan cancellation for certain teachers' service in low income areas defined in the US Dept. of Ed's annual listing (accessed at www://ifap.ed.gov), Directory of Designated Low-Income Schools for Teacher Cancellation Benefits for the 20xx-xx School Year. The Blue Book: Accounting, Recordkeeping and Reporting by Post-Secondary Education Institutions for Federally Funded Student Financial Aid Programs provides guidelines for accounting standards.
The Controller has overall responsibility for the accounting of the Perkins Loan Program. The Accounts Receivable Department is directly responsible for the administration and maintenance of the Perkins Loan files and loans advanced to individuals and their collection. The Financial Aid Officer is responsible for initiating disbursement requests and for assuring that loans are evidenced by a properly executed note. The Financial Aid Officer is further responsible for providing authority to release or void disbursements of Perkins advances.
A. Grant Accounting - Perkins loans are funded by the Department of Education and Fort Lewis College in statutory proportions. Fort Lewis College contribution being one-third of the Federal portion. The contributions by each will be segregated in Fort Lewis College accounts and the amounts maintained therein on a cumulative basis. The Accounts Receivable supervisor will draw the Federal funded portion at the beginning of each academic year to be utilized in the Fall Term loan disbursements. This person will also prepare a journal voucher to transfer the Fort Lewis College matching funds at the same time. The Controller will calculate and transfer the administrative expense allowance as of June 30th of each year.
B. Advances and Loans - Loans will be advanced to students upon presentation of the proper supporting documentation by the Financial Aid Officer.
1. Disbursements by Check - Loan advances will be netted against charges to the studentÃ¢Â¿Â¿s account and a check will be issued for any excess balance.
2. The Accounts Receivable section will receive the original promissory notes from the Financial Aid Office and record the disbursements to a Perkins loan data system. The Banner account 311000 - 1272, Loans Advanced, is reconciled to the Perkins loan data system and to the notes received to ensure that a properly executed note exists for each disbursement made.
C. Reconciliations - The reconciliations of the Perkins Student Loan detail register to the general ledger will be performed monthly. These reconciliations will be retained as a part of the documentation reflecting the exercise of due diligence in accounting for Perkins advances.
D. Exit Interview - As part of the withdrawal procedure, and prior to expected graduation, individual students who have received Perkins advances shall have an exit interview. The student shall be required to execute the appropriate forms and furnish information at this interview. Interviews that are not conducted in person are mailed to the permanent address of the borrower.
E. Collection Procedure
1. Deferrals and Cancellations - Deferrals will be accounted for in the categories provided by the Perkins regulation as will be cancellations, if any, associated with such deferrals.
2. Notification of Repayment Status - All borrowers are contacted 90 days after the commencement of their grace period reminding them of the amount owed, including principal and interest accruing over the remaining life of the loan, and the date and amount of the first payment. Borrowers with a nine month grace period are contacted a second time, 150 days after the beginning of their grace period, notifying them of the date and amount of the first required payment. First payment due letter will be mailed 30 days prior to due date, informing them of the date and amount of the first payment.
A coupon booklet will be mailed 30 days before the first payment is due.
3. Receipting - Accounts Receivable is responsible for receipting all Perkins Loan payments. Payments are credited to individual borrowers accounts in the Perkins Loan data system, automatically allocating late charges, interest and principal as assessed and accrued. A summary deposit is made to the CashierÃ¢Â¿Â¿s Office daily to credit the appropriate Banner general ledger accounts. In the case of returned checks, a Fort Lewis College check is drawn by the CashierÃ¢Â¿Â¿s Office debiting the appropriate late charge, interest and principal accounts based on information from the Accounts Receivable Office. A $20 penalty charge is added to the borrowers principal balance in accordance with the terms of the promissory note.
4. Delinquency - When the borrower becomes overdue, a late charge of $1.00 may be assessed for the first month and $2.00 for each additional month a payment is overdue.
As the borrower becomes delinquent, progressive notices will be mailed by Fort Lewis College. These notifications are mailed fifteen (15) days delinquent, thirty (30) days delinquent, forty five (45) days delinquent, sixty (60) days delinquent, and ninety (90) days delinquent. If these postal attempts to obtain repayment fail, additional attempts will be made to contact the delinquent borrower by telephone and/or loss of contact letter. The Final Demand letter sent informs the borrower that the account will be accelerated and turned over to the collection agency contracted with Fort Lewis College for this purpose. If no satisfactory response has been received after 90 days, the College utilizes the 90 day Default Reduction Assistance Program of the Dept of Ed. This series of three letters at 30 day intervals is sent, by monthly request, on DOE letterhead to the borrower. If there is no response, then the borrower is notified that the account has been turned over to the Central Collection Service and is given the name, telephone number, and address of the contact person at collections.