Finding Text
Federal Program Information: Federal Perkins Loan Program (ALN #84.038)
Criteria or Specific Requirement: Special Tests and Provisions – Perkins Loan Recordkeeping and Record Retention - Institutions must retain original or true and exact copies of promissory and master promissory notes (MPN), repayment records, and cancellation and deferment requests for each Perkins loan made, in a locked, fireproof container. (34 CFR 674.19.(e))
Condition: Instances where the University did not retain the original or true and exact copies of promissory notes.
Cause: Lack of administrative oversight with respect to recordkeeping and record retention related to the Federal Perkins Loan program (“Perkins”), including improper tracking and storage of records.
Effect or Potential Effect: The University was not in compliance with the Perkins loan recordkeeping and record retention requirements.
Questioned Costs: None.
Context: For 6 of 35 borrowers with open loans selected for testing, the University did not retain an original or true and exact copy of the promissory note. For 5 of 40 borrowers with retired loans within the previous three fiscal years and current fiscal year, the University did not retain the appropriate records.
Identification as a Repeat Finding: Yes – Finding 2022-003
Recommendation: We recommend the University retain the appropriate records for the required timeframe. We also recommend a full review of records on-hand.
Views of Responsible Officials: The Policy and Procedures manual has been updated to reflect this process. The Business Office has implemented measures to ensure that Perkins Promissory Notes are identified, stored, and accessible during their repayment and collection period. In addition to the current filing system, the Business Office will utilize management software for ease of access and recording.
To ensure that all remaining promissory notes are kept in accordance with Department of Education regulations, the Business Office will:
• Record all incoming promissory notes internally and externally.
• Promissory notes created prior to 2013 will be made digitally accessible through Perceptive Content, a secure content management system. Access to these promissory notes will only be accessible by parties with authorized access.
• Promissory notes created after 2013 will continue to be made available through Heartland ECSI’s third party filing system. ECSI records paid, completed, cancelled, and retired promissory notes that were created after 2013.
• In accordance with the Perkins Assignment and Liquidation Guide from the Department of Education (EA ID: General-21-53), all accounts with promissory notes unable to be located will be written off and/or purchased from the Department of Education. The University recorded an entry to repurchase open default loans as of June 30, 2023.