1. Perkins Loans – To Assign Or Not To Assign October 28, 2014

2. Perkins Assignment 34 CFR 674.50 2 Property of Heartland ECSI. Do Not Distribute.

3. What’s the difference between a “good” and “bad” assignment? 3 Property of Heartland ECSI. Do Not Distribute.

4. Perkins Loan Assignment Perkins Loan Assignment | 34 CFR 674.50 You may assign a defaulted Perkins Loan to FSA’s Debt Collections Resolution Services, if: It has not been able to collect despite having followed due diligence procedures (including at least a first level of collection), The total amount of the borrower’s account to be assigned, including outstanding principal, accrued interest, collection costs, and late charges, is $25 or more, and The loan has been accelerated. 4 Property of Heartland ECSI. Do Not Distribute.

5. Perkins Loan Assignment 34 CFR 674.50 You may not assign a loan to FSA Collections, if: The borrower has received a discharge in bankruptcy—unless the bankruptcy court has determined that the student loan obligation is non-dischargeable and has entered a judgment against the borrower or unless a court of competent jurisdiction has entered judgment against the borrower on the loan after the entry of the discharge order. Your school has sued the borrower (unless the judgment has been entered and assigned to the United States); or the loan has been discharged because the borrower has died. 5 Property of Heartland ECSI. Do Not Distribute.

6. Perkins Loan Assignment Required Documentation A school may be required to submit the following documents to Debt Resolution Services for any loan it proposes to assign: Submission Manifest One original and one photocopy of the assignment (1845) form; The original promissory note or a certified copy of the original note;  For e-signed prom notes, school’s most recent audit must verify e-sign process meets ED’s e- sign standards A copy of the repayment schedule and a complete statement of the payment history; Copies of all approved requests for deferment and cancellation; A copy of the notice to the borrower of the effective date of acceleration and the total amount due on the loan; 6 Property of Heartland ECSI. Do Not Distribute.

7. Perkins Loan Assignment Required Documentation A school may be required to submit the following documents to Debt Resolution Services for any loan it proposes to assign: documentation that the school has withdrawn the loan from any firm that it employed for address search, billing, collection, or litigation services and has notified that firm to cease collection activity on the loans; copies of all pleadings filed or received by the school on behalf of a borrower who has filed a petition in bankruptcy and whose loan obligation is determined to be nondischargeable; a certified copy of any judgment order entered on the loan; documentation that the school has complied with all of the due diligence requirements if the school has a cohort default rate that is equal to or greater than 20% as of June 30 of the second year preceding the submission period. 7 Property of Heartland ECSI. Do Not Distribute.

8. Perkins Loan Assignment Required Documentation – Standard Assignments http://ifap.ed.gov/eannouncements/attach ments/PerkinsAssignmentProceduresApril2 013.pdf 8 Property of Heartland ECSI. Do Not Distribute.

9. Perkins Loan Assignment Mandatory Assignment The Department no longer has the authority to require mandatory assignment of Perkins Loans based on a school’s Program Participation Agreement. The Department may request that a school assign its portfolio if the school is no longer making loans. The Department continues to have the authority to require mandatory assignment if a school has knowingly failed to maintain an acceptable collection record with regard to the loan or chooses to stop servicing and collecting its Perkins Loans. 9 Property of Heartland ECSI. Do Not Distribute.

10. Perkins Loan Assignment Other Reasons for Assignment Liquidation Closed School 10 Property of Heartland ECSI. Do Not Distribute.

11. Perkins Loan Assignment Required Documentation - Liquidation http://ifap.ed.gov/eannouncements/at tachments/PerkinsLoanLiquidationProc eduresApril2013.pdf 11 Property of Heartland ECSI. Do Not Distribute.

12. Perkins Loan Assignment Reasons to Assign Defaulted Loans Removes bad paper (defaulted loans) from your loan portfolio Relieves schools from incurring additional collection expenses Reduces traditional (old) default rate 12 Property of Heartland ECSI. Do Not Distribute.

13. Perkins Loan Assignment Reasons to Assign Defaulted Loans Department of ED has more tools at its disposal for collection  Administrative Wage Garnishment  Treasury Offset  Litigation By Department of Justice 13 Property of Heartland ECSI. Do Not Distribute.

14. Perkins Loan Assignment Reasons Not to Assign Defaulted Loans Loss of Institutional Capital Contribution (ICC) Department of ED will not return any collections to the school No positive impact to Cohort Default Rate Loans become more collectible as they age School has success with state tax offset Your collection agencies don’t want you to 14 Property of Heartland ECSI. Do Not Distribute.

15. Perkins Loan Assignment – Heartland ECSI Process 15 Property of Heartland ECSI. Do Not Distribute. Assignments are received daily via USPS, Fedex, UPS. Assignment packages are logged showing delivery method and sender. Packages are opened and reviewed to ensure all required documents were received: Manifest, Institutional form, 1845 Borrower form, original or certified copy of prom note, payment history. Cohort Default Rates checked. Assignments are entered into the Heartland ECSI system. For assignments missing required information we reach out to the school by phone or email to request documents/information.  This is done a minimum of two times before rejecting back to the school after 8 days. If we are able to obtain the missing information the assignment is corrected in the system and file is moved into SAL production overnight.

16. Perkins Loan Assignment – Heartland ECSI Process 16 Property of Heartland ECSI. Do Not Distribute. If unable to resolve, the assignment will be rejected and be returned to the school after 8 days with report explaining why it was returned. All approved assignments are then loaded into Heartland ECSI’s loan servicing system each evening. Assignment packages are scanned. File is stored, then sent to offsite facility for storage.

17. Perkins Loan Assignment – Heartland ECSI Process 17 Property of Heartland ECSI. Do Not Distribute. Heartland ECSI has processed nearly 20,000 Perkins assignments since we started servicing for FSA in November 2013. Of the 20,000 we have only had to send back 1.9% of the packages after 8 days. We do everything in our power to resolve these so we do not have to send the packages back.

18. Property of Heartland ECSI – Do Not Distribute Total & Permanent Disability (TPD) Process

19. Property of Heartland ECSI – Do Not Distribute TPD Process If a borrower is totally and permanently disabled, he or she may be eligible to discharge federal Perkins loans. The Total and Permanent Disability (TPD) discharge process is: 1.Borrower completes an application and submits it to Nelnet, the Department of Education’s TPD servicer. 2.Nelnet notifies Heartland ECSI that the application is being reviewed by sending a loan notification file. Note: Notification process changing from email to SAIG. The loan notification file includes a code which tells Heartland ECSI what to do with the account. Nelnet will tell us if it is a STD (Standard) or VET (Veteran) Total and Permanent Disability a.120SUSP—The borrower has entered the application process. Post a 120 day deferment. b.INDEFSUSP—NelNet has received a complete application and is reviewing it. Post a disability deferment within 15 days of receipt of loan notification file. 19

20. Property of Heartland ECSI – Do Not Distribute TPD Process c.APPAPPR—The application has been approved. A Disability Cancellation must be processed within 15 days of receipt of loan notification file. An 1845-0048 should be generated and sent to the school. Then a Disability Cancellation should be posted to the borrowers account to close out the balance within the system. The school needs to complete its part of the 1845-0048 and send it to Nelnet with promissory note. d.APPREJ—The application has been rejected. Manually end the deferment by changing the cancellation end date to within 3 business days of the notification. The borrower will be notified automatically via email or regular mail. 3.Once the application has been approved, the borrower enters a three-year long monitoring process. During that monitoring, if it is determined that the borrower is no longer permanently and completely disabled, the loan may be restored and billing will resume. Note: Heartland ECSI does not service TPD assignments. 20

21. Property of Heartland ECSI – Do Not Distribute Questions or Comments? Contact Information: Chris Stompanato P: 630.836.8712 M: 412.865.5687 cstompanato@ecsi.net