December 9, 2004

Good day everyone. Over the past few months we have learned about increasing concern at the Department of Education over "old paper." One of the major issues that the Department is criticizing the Perkins Loan program for is the perception that as much as $1 billion in defaulted Perkins loans are outstanding that have not been assigned to the Department for further collection activity. It is not completely clear what the definition of "old" is, but it is clear that loans that are 10 years or more in default are considered a big problem, and those in default five years or more are also being scrutinized. In both cases, there is interest at the Department in determining how much collection activity is taking place on the old loans and to consider whether those loans should be assigned.

The COHEAO Board of Directors discussed this issue at a recent meeting and decided to go ahead and send out a notice strongly advising institutional members to review their portfolio and to consider what steps need to be taken to be certain that regulations regarding collection activity are being followed. We will need to work with the Department to show that the Perkins program is operating well. (We have scheduled a session with the Department to discuss this and other portfolio management issues at the upcoming Annual Conference.)

If you have any questions or comments, please let one of the COHEAO Board members know, or contact the COHEAO staff - myself or Andrew Stringer - via email or telephone.

We look forward to seeing you all in January at a very important Annual Conference!

Harrison: hwadsworth@wpllc.net
Andrew: astringer@wpllc.net