ED Addresses Perkins Shortfalls
May 28, 2008
The Department of Education will provide leeway for institutions running a shortfall in their Federal Perkins Loan revolving funds by allowing them to recoup institutional short-term loans to the funds over a longer period. This was accomplished by changing the instructions for filling out the annual report provided by institutions to ED on the operation of the campus-based aid programs.
Recently released draft instructions for the Fiscal Operations Report and Application to Participate, known as the FISAP, tell institutions to include any short-term loan to the Perkins Fund as additional Institutional Capital Contribution (ICC). But what the new instructions do not say is most important: the previous instructions stated that the institution must repay, within the following award year, any short-term, no-interest loans made to the fund. The draft instructions for the 2009-2010 FISAP (which reports on operations for the 2007-2008 award year) include no time limit for repaying a loan from the institution to the fund.
The draft instruction reads:
You may never enter a negative amount in Field 1.1. Expenditures that exceed the amount of cash on hand in the Loan Fund must be charged to an Institutional Capital Contribution (ICC) and deposited into the Fund as of June 30, 2008. These funds are considered as additional ICC and are reported in Field 22. If a school intends to reclaim the additional ICC that it deposited during the 2007-2008 award year, the additional ICC must be entered as a short-term, no interest loan made to the Fund in the accounting records of the school. A school repays a short-term, no interest loan with monies made available through collections or the receipt of FCC in years when FCC is authorized. When a school repays itself a short-term, no interest loan it made to the Fund, the repayment must be reported in Field 23.
A recent survey conducted by NACUBO and the Coalition of Higher Education Assistance Organizations showed that almost 30 percent of responding institutions expected to run a shortfall in their Perkins Loan funds this year. This change will allow colleges and universities to choose to repay themselves over the course of several years in order to lessen the impact on their ability to make new loans to students in the coming year.
NACUBO Contact: Anne C. Gross, vice president, regulatory affairs, 202.861.2544
- NACUBO Expresses Concerns with ED Proposal to Expand Federal Financial Responsibility Rules
- IRS Proposes Modifications to 1098-T Reporting
- ED Policy to Require Annual Student Aid Compliance Audits Beginning FY17
- 2016 Intermediate Accounting and Reporting Fall
October 24-25, 2016
- ON-DEMAND: The CBO's Role in Diversity and Inclusion on Campus
- ON-DEMAND: The Clery Act: Strategic Planning to Mitigate Institutional Risk
- ON-DEMAND: Title IX: Key Issues Surrounding Institutional Compliance
- ON-DEMAND: NACUBO Live! Higher Education Accounting Forum
- ON-DEMAND: Responsibility Center Management: Two Different Perspectives