Activity 4: Federal Perkins Loan

Regulations:
[**674.10**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=10&TYPE=TEXT)
(Selection of students for loans),
[**674.16**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=16&TYPE=TEXT)
(Loan Disclosure)
[**674.19**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=19&TYPE=TEXT)
(Fiscal Procedures and Records),
[**674.38**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=38&TYPE=TEXT)
(Deferment),
[**674.42**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=42&TYPE=TEXT)
(Contact With the Borrower),
[**674.43**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=43&TYPE=TEXT)
(Billing),
[**674.45**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=45&TYPE=TEXT)
(Collection),
[**674.46**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=46&TYPE=TEXT)
(Litigation), and
[**674.52**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=52&TYPE=TEXT)
(Cancellation)

Review Section:

-   Selection of students for loans

-   Loan Disclosure

-   Fiscal Procedures and Records

-   Deferment

-   Contact with the Borrower

-   Billing

-   Collection

-   Litigation

-   Cancellation

Good Practices:

To assist you with the completion of this Policy and Procedure, we
recommend that you\
consider the following:

-   Consider developing the Policies and Procedures in a manual or an
    electronic format with a table of contents for easy reference.

-   Develop a schedule to test, review and update your manual.

-   Establish a team that incorporates all appropriate offices to assist
    in the review and writing of the procedure.

[Instructions for completing this activity:]{.underline} We recommend
that you refer to your current policies and procedures to determine if
your institution meets the requirements listed above in the Review
Section and set forth in the Federal Regulations. Please review the
appropriate sections in the Code of Federal Regulations (the link is
provided for you), and the activity below, to determine if your
institution is currently meeting those requirements. Remember, you are
required to develop policies and procedures and are responsible to
follow the procedures you develop. An auditor or program reviewer can
cite your school for not having polices and procedures and for not
following them.

+-----------------------------------------------------------------------+
| Reminder:                                                             |
|                                                                       |
| It is important to have your policy and procedures in writing. It is  |
| equally important however, to ensure that the process is being        |
| followed. We recommend that you test your policy and procedures by    |
| completing the recommended assessment(s) outlined in the Design       |
| Process for Policies and Procedures. Also, remember to\               |
| train your staff on the procedures you develop or revise.             |
+-----------------------------------------------------------------------+

Management Enhancement:

If you determine that an area requires improvement, it is recommended
(not required) that you consider completing a Management Enhancement
Form. This will help you track what needs to be included who is
responsible to make sure the policy and/or procedure is updated and
identifies an anticipated completion date. [Management Enhancement
Form](http://ifap.ed.gov/qamodule/MgtEnhancementWk.html).

**Topic:** Selection of Students for Loans

Regulation:
[674.10](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=10&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Selection of students    | Located In         | Offices Involved    |
| for loans                |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Establish selection  |                    |                     |
|     procedures and they  |                    |                     |
|     must be in writing,  |                    |                     |
|     uniformly applied    |                    |                     |
|     maintained in the    |                    |                     |
|     institutions files.  |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Define exceptional   |                    |                     |
|     financial need for   |                    |                     |
|     the purpose of the   |                    |                     |
|     priority to all      |                    |                     |
|     students eligible    |                    |                     |
|     under [34 CFR        |                    |                     |
|     6                    |                    |                     |
| 74.9](http://frwebgate.a |                    |                     |
| ccess.gpo.gov/cgi-bin/ge |                    |                     |
| t-cfr.cgi?TITLE=34&PART= |                    |                     |
| 674&SECTION=9&TYPE=TEXT) |                    |                     |
|     but give priority to |                    |                     |
|     those students with  |                    |                     |
|     exceptional need.    |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Perkins Loan Disclosure

Regulation:
[**674.16(a)**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=16&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Perkins Loan Disclosure  | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   Establish procedures |                    |                     |
|     that explain a       |                    |                     |
|     Perkins borrower's   |                    |                     |
|     rights and           |                    |                     |
|     responsibilities for |                    |                     |
|     borrowing funds      |                    |                     |
|     under the Federal    |                    |                     |
|     Perkins Loan         |                    |                     |
|     Program. These       |                    |                     |
|     procedures must      |                    |                     |
|     address all of the   |                    |                     |
|     information in       |                    |                     |
|     [674.16(a)(1) and    |                    |                     |
|     (                    |                    |                     |
| 2).](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 74&SECTION=16&TYPE=TEXT) |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Fiscal Procedures and Records

Regulation:
[**674.19**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=19&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Fiscal Procedures and    | Located In         | Offices Involved    |
| Records                  |                    |                     |
+--------------------------+--------------------+---------------------+
| Return of Title IV       |                    |                     |
| Policies and Procedures  |                    |                     |
| Checklist                |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Establish and        |                    |                     |
|     maintain an internal |                    |                     |
|     control system of    |                    |                     |
|     checks and balances  |                    |                     |
|     that insures that no |                    |                     |
|     office can both      |                    |                     |
|     authorize payments   |                    |                     |
|     and disburse funds   |                    |                     |
|     to students.         |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Identify how the     |                    |                     |
|     school maintains     |                    |                     |
|     funds received under |                    |                     |
|     Federal Perkins Loan |                    |                     |
|     in accordance        |                    |                     |
|     [668.16              |                    |                     |
| 3](http://frwebgate.acce |                    |                     |
| ss.gpo.gov/cgi-bin/get-c |                    |                     |
| fr.cgi?TITLE=34&PART=668 |                    |                     |
| &SECTION=163&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Establish and        |                    |                     |
|     maintain program and |                    |                     |
|     fiscal records that  |                    |                     |
|     are reconciled       |                    |                     |
|     monthly.             |                    |                     |
+--------------------------+--------------------+---------------------+
| -   A process to         |                    |                     |
|     coordinate and       |                    |                     |
|     submit a Fiscal      |                    |                     |
|     Operations Report    |                    |                     |
|     plus other           |                    |                     |
|     information the      |                    |                     |
|     secretary requires.  |                    |                     |
|     A process to insure  |                    |                     |
|     that the information |                    |                     |
|     reported is accurate |                    |                     |
|     and shall submit it  |                    |                     |
|     on the form and at   |                    |                     |
|     the time specified   |                    |                     |
|     by the Secretary.    |                    |                     |
+--------------------------+--------------------+---------------------+
| -   The process to       |                    |                     |
|     insure the school    |                    |                     |
|     follows the record   |                    |                     |
|     retention and        |                    |                     |
|     examination          |                    |                     |
|     provision in         |                    |                     |
|     [668.                |                    |                     |
| 24](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=66 |                    |                     |
| 8&SECTION=24&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Deferment

Regulation:
[**674.38**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=38&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Deferment                | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   Process for handling |                    |                     |
|     and processing a     |                    |                     |
|     student's request    |                    |                     |
|     for a deferment      |                    |                     |
|     except as provided   |                    |                     |
|     in paragraph\        |                    |                     |
|     [34 CFR              |                    |                     |
|     674.38(a)(           |                    |                     |
| 2)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=67 |                    |                     |
| 4&SECTION=38&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Process for          |                    |                     |
|     reviewing continued  |                    |                     |
|     eligibility of a     |                    |                     |
|     deferment on an      |                    |                     |
|     annual basis.        |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Contact With the Borrower

Regulation:
[**674.42**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=42&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Contact with the         | Located In         | Offices Involved    |
| Borrower                 |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Process for          |                    |                     |
|     disclosing the       |                    |                     |
|     required information |                    |                     |
|     contained in         |                    |                     |
|     [674.42              |                    |                     |
| (a)](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 74&SECTION=42&TYPE=TEXT) |                    |                     |
|     either shortly       |                    |                     |
|     before the borrower  |                    |                     |
|     ceases at least      |                    |                     |
|     half-time study at   |                    |                     |
|     the school or during |                    |                     |
|     the exit interview.  |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Process to ensure    |                    |                     |
|     that Federal Perkins |                    |                     |
|     Exit Counseling is   |                    |                     |
|     conducted in         |                    |                     |
|     accordance with      |                    |                     |
|     [674.42(             |                    |                     |
| b).](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 74&SECTION=42&TYPE=TEXT) |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Billing

Regulation:
[**674.43**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=43&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Billing                  | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   Written billing      |                    |                     |
|     procedures for all   |                    |                     |
|     actions routinely    |                    |                     |
|     performed to notify  |                    |                     |
|     borrowers of         |                    |                     |
|     payments due on      |                    |                     |
|     their accounts, to   |                    |                     |
|     remind borrowers     |                    |                     |
|     when payments are    |                    |                     |
|     overdue, and to      |                    |                     |
|     demand payment of    |                    |                     |
|     overdue amounts.     |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Provide process to   |                    |                     |
|     address all billing  |                    |                     |
|     procedures that      |                    |                     |
|     include at least the |                    |                     |
|     steps outlined in    |                    |                     |
|     [674.                |                    |                     |
| 43](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=67 |                    |                     |
| 4&SECTION=43&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Collection

Regulation:
[**674.45**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=45&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| **Collection**           | **Located In**     | **Offices           |
|                          |                    | Involved**          |
+--------------------------+--------------------+---------------------+
| -   Written Collection   |                    |                     |
|     procedures that      |                    |                     |
|     address a more       |                    |                     |
|     intensive effort,    |                    |                     |
|     including litigation |                    |                     |
|     as described in\     |                    |                     |
|     [34 CFR              |                    |                     |
|     674                  |                    |                     |
| .46](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 74&SECTION=46&TYPE=TEXT) |                    |                     |
|     to recover amounts   |                    |                     |
|     owed from defaulted  |                    |                     |
|     borrowers who do not |                    |                     |
|     respond              |                    |                     |
|     satisfactorily to    |                    |                     |
|     the demands          |                    |                     |
|     routinely made as    |                    |                     |
|     part of the          |                    |                     |
|     institution's        |                    |                     |
|     billing procedures.  |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Written collection   |                    |                     |
|     procedures that      |                    |                     |
|     address when a       |                    |                     |
|     borrower does not    |                    |                     |
|     satisfactorily       |                    |                     |
|     respond to the final |                    |                     |
|     demand letter or the |                    |                     |
|     following telephone  |                    |                     |
|     contact made in      |                    |                     |
|     accordance with      |                    |                     |
|     [674.43(             |                    |                     |
| f)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=67 |                    |                     |
| 4&SECTION=43&TYPE=TEXT), |                    |                     |
|     the institution must |                    |                     |
|     follow the           |                    |                     |
|     requirements         |                    |                     |
|     outlined in          |                    |                     |
|     [674.45(1)(2)(       |                    |                     |
| 3)](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=67 |                    |                     |
| 4&SECTION=45&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Litigation

Regulation:
[**674.46**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=46&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Litigation               | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   Written Litigation   |                    |                     |
|     procedures if        |                    |                     |
|     collection efforts   |                    |                     |
|     described in         |                    |                     |
|     [674                 |                    |                     |
| .45](http://frwebgate.ac |                    |                     |
| cess.gpo.gov/cgi-bin/get |                    |                     |
| -cfr.cgi?TITLE=34&PART=6 |                    |                     |
| 74&SECTION=45&TYPE=TEXT) |                    |                     |
|     do not result in the |                    |                     |
|     repayment of a loan, |                    |                     |
|     the institution      |                    |                     |
|     shall determine at   |                    |                     |
|     least once every two |                    |                     |
|     years the guidance   |                    |                     |
|     provided in          |                    |                     |
|     [674.                |                    |                     |
| 46](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=67 |                    |                     |
| 4&SECTION=46&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+

**Topic:** Cancellation

Regulation:
[**674.52**](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=674&SECTION=52&TYPE=TEXT)

+--------------------------+--------------------+---------------------+
| Cancellation             | Located In         | Offices Involved    |
+--------------------------+--------------------+---------------------+
| -   Written procedures   |                    |                     |
|     that outline how to  |                    |                     |
|     qualify for a        |                    |                     |
|     cancellation of a    |                    |                     |
|     loan, a borrower     |                    |                     |
|     shall submit to the  |                    |                     |
|     institution to which |                    |                     |
|     the loan is owed, by |                    |                     |
|     the date that the    |                    |                     |
|     institution          |                    |                     |
|     establishes, both a  |                    |                     |
|     written request for  |                    |                     |
|     cancellation and any |                    |                     |
|     documentation        |                    |                     |
|     required by the      |                    |                     |
|     institution to       |                    |                     |
|     demonstrate that the |                    |                     |
|     borrower meets the   |                    |                     |
|     conditions for the   |                    |                     |
|     cancellation         |                    |                     |
|     requested.           |                    |                     |
+--------------------------+--------------------+---------------------+
| -   Address requirements |                    |                     |
|     for cancellation in  |                    |                     |
|     regard to Part-time  |                    |                     |
|     employment,          |                    |                     |
|     Cancellation of a    |                    |                     |
|     defaulted loan, and  |                    |                     |
|     Concurrent deferment |                    |                     |
|     period as outlined   |                    |                     |
|     in [34 CFR           |                    |                     |
|     674.                 |                    |                     |
| 52](http://frwebgate.acc |                    |                     |
| ess.gpo.gov/cgi-bin/get- |                    |                     |
| cfr.cgi?TITLE=34&PART=67 |                    |                     |
| 4&SECTION=52&TYPE=TEXT). |                    |                     |
+--------------------------+--------------------+---------------------+