ECSI Regulation Bulletin - Mandatory Government Assignment
On November 1st, the Federal Department of Education (DOE) released final regulations on the Federal Perkins Loan Program, Federal Family Education Loan Program, and the William D. Ford Federal Direct Loan Program. These regulations will take effect on July 1st, 2008. As your servicer, ECSI feels that it is our duty to keep track of these regulations for you, being sure to keep your institution in compliance with all mandatory federal regulations.
Regulation Spotlight: Mandatory Government Assignments
Regulation: Mandatory Government Assignments for Perkins Loans is now a fact. To what degree is still to be determined. As of now, the regulations, that will take effect July 2008, state government assignment is mandatory when:
- The outstanding principle balance on the loan is 100 dollars or more
- The loan has been in default for seven (7) or more years
- And, a payment has not been received on the loan in the preceding twelve (12) months
However, current legislation (HR4137, the College Opportunity and Affordability Act of 2007) was introduced to reauthorize the HEA Bill, and has most recently been approved by the House Education and Labor Committee. It still needs to pass through the House Floor, then the Senate and its committees, and then finally signed by the President to be passed. If passed into law, this bill would limit the ability of the DOE to require assignment of defaulted Perkins Loans, for example:
- The DOE would only be allowed to require assignment of defaulted Perkins Loans in cases where schools failed to knowingly maintain records or decided not to service the loan
- The DOE would be required to return Perkins funds collected from voluntary assigned loans back to the institution that assigned them, within 180 days, minus collection costs
Solution: ECSI will keep you updated on the latest news coming out of Washington concerning the HR4137 legislation. Until then, ECSI has developed a solution that would help your institution facilitate any assignments come July 1, 2008. ECSI's Government Assignment Solution includes:
- ECSI will Review all loans before assignment
- ECSI will gather and complete all paperwork (i.e. 553 form, assignment manifest, promissory notes, etc.)
- ECSI will store all information
- ECSI will send the assignments to the DOE on your behalf
If you may be interested in this service, or have any questions regarding the new regulations such as Mandatory Government Assignments, please feel free to contact ECSI at any time.
Other Regulated Responsibilities:
Please keep in mind that there are many other Federally Regulated Responsibilities that institutions must follow. ECSI will keep you notified and updated on them in future "Regulation Bulletin's". They include:
- 1098-T's - Per regulations, any student that paid any qualified tuition and/or expenses ina given year must be given a 1098-T tax form for that year. (More Information)
- Promissory Notes - We all know the importance of Promisory Notes, however, regulations give an institution several ways for them to be signed. (More Information)
- Exit Interviews - Like Promissory Notes, Exit Interviews are a very important part of Federal Loan Regulations, that can be completed in several different ways. (More Information)
- Disclosure Statements - Regulations State that a borrower must be kept aware of the total amount of their loans while still enrolled. Disclosures can be sent to a borrower in a variety of ways. (More Information)
- 90 Day Due Diligence Calls - Though it could be a time consuming process, 90 Day Calls are mandatory for all borrowers who are at least 90 days past-due on payments. (More Information)
If you ever have a question on any regulation, please feel free to contact us at any time. ECSI feels it employs the most educated and knowledgeable staff in the Student Loan Servicing Industry.