Ms. Gail McLarnon

U.S. Department of Education

1990 K Street, NW Room 8026

Washington, DC 2006-8542

# 

**Re: Response to June 12, 2007 Notice of Proposed Rulemaking (NPRM) re
Loan Issues**

**Docket ID ED-2007-OPE-0133**

Dear Ms. McLarnon,

Per the June 12, 2007 Notice of Proposed Rulemaking (NPRM), University
Of Charleston is happy to submit the following comment regarding the
Federal Perkins Loan Program:

**Significant Proposed Regulations**

**Mandatory Assignment of Defaulted Perkins Loans. (Sec. Sec. 674.8
and**

**674.50)**

On page 32418, the proposed regulations discuss mandatory assignment of
defaulted loans as follows:

Proposed Regulations: The proposed regulations in Sec. 674.8(d)(3)

would provide that the PPA also include a provision under which the

Department could require assignment of a Perkins Loan if the

outstanding principal balance of the loan is \$100 or more, the loan has

been in default for seven or more years, and a payment has not been

received on the loan in the preceding 12 months.

**Comment:** Under this modified proposal, University Of Charleston
would stand to lose approximately 26 loans totaling almost 43,192.10. As
proposed, there would be no sharing of post-assignment collections with
the school. Considering the skyrocketing cost of higher education during
these challenging economic times, University Of Charleston feels this
requirement is harsh and unreasonable and will ultimately punish
students by reducing resources available to them to help fund their
education.

Also, the proposal states that the Department has collection tools
unavailable to schools:

The Department has collection tools, such as Federal benefit

offsets, that are not available to the Perkins institutions. The

Department has encouraged schools to voluntarily assign these old

defaulted loans, so that the Department may employ these tools to

collect on these loans.

However, research has shown that many loans assigned to the Department
remain uncollected. As the Department has done, University Of Charleston
has contracted with several third-party collection agencies and
continually rotates all of its defaulted loans between these agencies
until they are paid in full. While the Department may have collection
tools that are unavailable to schools, it has not been documented that
it is using them to do a better job of collecting assigned accounts.
Schools also have collection tools that are unavailable to the
Department such as administrative holds to prevent services i.e.
registration, transcripts, etc. that have resulted in substantial
collection on loans falling into this category. Listed below are the
dollars collected over the last three years on loans seven years or more
delinquent:

7-1-2004 to 6-30-2007 collected 18,218.92

Balance on loans that are 7 years and more past due: 43,192.10

The above collection total represents a 42% recovery rate of accounts
that are seven years or greater past due for the last three years.

Also, requiring assignment after seven years is unreasonable, especially
considering a ten-year repayment schedule. It is our feeling that the
government would struggle with a huge inventory of assignments if you
started at 7 years and older (past due). It would make more sense to
start at 15 years past due and gradually move towards 7 years past due.

We appreciate the opportunity to comment and be involved in the
negotiated rulemaking process. We look forward to your response.

Sincerely,

University Of Charleston