Federal Loan Program Benefitting 200+ Gettysburg Students Expires
By Zach Warner, Staff Writer
The Perkins Loan program initiated by Congress in 1958 expired on September 30, when Senate declined to pass the Higher Education Act extension bill from the House of Representatives. It was the oldest student aid program in the country.
Perkins Loans are offered to undergraduate and graduate students from low-income families to help cover the cost of post-secondary education. Many of the students who benefit from the program would not be able to attend college without these loans.
Participating colleges and universities receive funds directly from the federal and have some discretion regarding who receives Perkins Loans and how much they receive because the institution is required to match one-third of the funding provided by the fed. The system operates as a revolving fund by offering new loans as old loans are repaid.
This system works because repayment periods must be less than 10 years, interest rates are fixed at 5 percent, and undergraduate students cannot borrow more than $4,000 per year.
According to data from the Federal Education Budget Project, a non-partisan source of information on federal education funding, 206 Gettysburg College students received a sum of $348,700 in 2013 to help pay for educational expenses.
Although, students who received a Perkins Loan during or before the 2014-2015 school year have been grandfathered into the program so long as they do not change major or transfer to another college. No new loans will be made under this program.
In fiscal year 2014 the fed made about half a million Perkins Loans at the average value of $1,700. This financial support is crucial for many low-income students to continue their education. $1.17 billion may seem like a hefty chunk of change, but it is small percent compared to the total volume of new federal student loans disbursed in 2014 (valued at over $150 billion).
Ben Miller, an education expert at the Center for American Progress, argues that expensive institutions tended to benefit more from the program because the loan’s disbursement formula is partially based on the price of tuition. However, he simply proposes that the program receives a new formula.
Not only will the program’s expiration have critical effects on the students most in need of financial aid, it will also cut deep into the bottom line of thousands of small colleges and universities across the country. If Congress does not renew the program, colleges across the nation may be obligated to return billions of dollars to the Dept. of Education. During the first week of October, the House voted unanimously for a one-year extension of the program.
However, Sen. Lamar Alexander [R TN] (chair of the Senate Health, Education, Labor and Pensions Committee) blocked the Senate vote on the grounds that “Reauthorizing the Perkins Loan will cost $5 billion over 10 years,” which he believes would be better spent on additional Pell Grants. Sen. Charles Schumer [D NY] stated that the most likely chance of renewal would be to include the Perkins Loan program in the next federal budget due Dec. 11.
If you care about the Perkins Loan Program, or educational equity, contact your representatives and let them know that you support the nearly 40 thousand Pennsylvania students who benefit from this program.
Sen. Bob Casey Jr. [D PA]
Sen. Pat Toomey [R PA]
Rep. Scott Perry [R PA 4th District]