This report examines the Perkins Student Loan Program, and in particular, the weaknesses in the Department of Education's policies, procedures, and practices for recovering Perkins loan fund assets from schools that go out of business. The report reveals that when schools in the Perkins Student Loan Program close, the Department of Education lacks: (1) adequate guidance for accurately determining the value of assets due from the schools, and (2) a system for calculating and reconciling the value of assets returned with the amounts due. As a result, the Department does not know whether all Perkins assets are being received and accounted for. Additionally, the report reveals that Perkins loans recovered from closed schools are not promptly entered into the Department's debt-collection system, thereby allowing them to be serviced. As of June 1990, the Department had a 10-month backlog of loans to be serviced. Department officials also claimed that they expected school closures to increase further because of recent changes to the Higher Education Act and agreed that delays in recording and servicing loans acquired from closed schools can contribute to increased loan defaults. Conclusions and recommendations are included. (GLR)