Elimination of Perkins Loans Leads to Tough Options on Campuses

The federal Perkins Loan program expired last month after key Senator Lamar Alexander (R-TN) blocked legislation to extend it. The lapse leaves approximately 1,500 colleges and universities and 500,000 students without access to an important source of financial aid.

The bipartisan legislation, introduced in both the House and Senate, would have extended the program for an additional two years. Despite broad support from both parties in both chambers, chances for the extension appear slim, according to Inside Higher Ed.

Sen. Alexander, chair of the Senate education committee and longtime opponent of extending Perkins Loans, has argued that keeping the popular campus-based program only maintains an overly complex financial aid system. Campus officials, however, argue that that elimination of the program will not simplify aid, but will likely lead many students to take out private loans, which lack many of the protections for borrowers of federal student loans, Inside Higher Ed reported.

The Perkins program provides low-interest loans to students who cannot borrow or afford more expensive private student loans. Colleges originate, service, and collect the loans. Through a revolving fund, institutions invest millions of dollars to maintain loans available for future students. The federal government has not funded the program for well over a decade. Instead, it is paid for mostly by borrowers repaying their loans.

The loans are used to cover remaining gaps in the cost of attendance after a student is awarded federal aid. When a student encounters a serious financial emergency mid-semester, such as a family medical emergency or sudden loss of income, campus financial aid offices often turn to Perkins Loans.

"It makes a difference for them to be able to stay in school," Heather Boutell, director of financial aid at Bellarmine University, told Inside Higher Ed.

Financial aid administrators—like Boutell—who use Perkins, among a number of aid options, to meet student need say that letting the program die outside a comprehensive overhaul of financial aid will make their jobs more difficult without leading to greater simplicity.

 

Related Links

Inside Higher Ed

https://www.insidehighered.com/news/2017/10/24/likely-end-perkins-loans-sets-scramble-aid-administrators