The U.S. Department of Education has released guidance for schools still participating in the Federal Perkins Loan Program as part of the ongoing wind-down of the program. Although no new Perkins Loans have been made since 2017, institutions may still service existing loan portfolios and must now begin annual distributions of remaining cash assets.
Important: Institutions must NOT remove and return any funds to ED or the institution until the institution has been notified to do so.
The 2025–26 Distribution of Assets Notification Process
ED notifies institutions that have cash in the institution’s Perkins Fund subject to the distribution of assets process. The notification communicates the amounts of funds, both the federal and institutional shares, that must be removed and returned to ED and to the institution, respectively. Only the federal share ED requests to be returned should be remitted through G5 by the deadline communicated in the notification. Notifications are typically generated in January of each year.
Reimbursement for Perkins Loan Service Cancellations
ED also notifies institutions of the amount of partial reimbursement for Perkins Loan service cancellations the institution must remove from the Perkins Fund and return to the institution prior to the deadline.
Distribution of Assets and Reimbursement for Perkins Loan Service Cancellation Calculations
An institution’s Distribution of Assets is determined using the Proportional Share formula and information from the institution’s most recently submitted Fiscal Operations Report and Application to Participate (FISAP) form. The calculation accommodates both the changes in the Institutional Capital Contribution (ICC) matching requirements that have occurred over time and any overmatching of funds by the institution. The calculation also takes into consideration any Federal Capital Contribution (FCC) that had been previously returned by the institution to ED and any ICC that was previously repaid to the institution from the Perkins Fund. If your institution determines that any of the items used in the calculation were misreported on your submitted FISAP, corrections must be made prior to the Dec. 15, 2025, corrections deadline.
Determination of the institution’s amount of partial service cancellation reimbursement uses 2024–25 cancellation data as reported on the FISAP. This process takes into consideration any prior reimbursement for service cancellations.
The calculations used to determine the institutional share of cash, the federal share of cash, and the institutional share of service cancellations to be reimbursed use the following information:
- Cash on hand in the Perkins Fund (FISAP, Part III, Sec A, Line 1.1).
- Proportional share percentages are now calculated and displayed on the FISAP in the new Section F of Part III.
- Institutional share to be returned to the institution is the total cash on hand multiplied by the institutional share percentage.
- Partial reimbursement for service loan cancellation is the institutional share amount determined by ED using the institution’s 2024–25 cancellations data as reported on the FISAP.
- Federal share to be returned to ED is the total cash on hand, minus the institutional share owed, minus the amount of partial service cancellation reimbursement determined by ED.
Institutions are only permitted to charge to the Perkins Fund allowable costs incurred in collection of the principal and interest on loans not already reimbursed from the Perkins Fund or from payments by the borrower. You may refer to 34 CFR 674.47(e) for the limitations on costs charged to the Fund.