Congress has only until Sept. 30 to approve continuing the Federal Perkins Loan before the program officially expires.
The Federal Perkins Loan is a student loan program funded by the U.S. government for students with exceptional need. The loan itself is unique in that it is campus-based; the University decides how much loan funds are awarded to individual students. A student can receive up to 5,500 dollars. The loan is also what is known as a revolving door loan. This means the money students receive from the Federal Perkins Loan is money that was paid back to the loan program by previous students.
The loan has a fixed interest rate of five percent, making it much easier to pay back than private alternative student loans given out by banks and private companies. Depending on the type of loan students take out, they could be paying an interest rate of six percent to eight percent according to Forbes magazine. This can be hard for students who have just graduated college, especially since nonfederal loans do not have a grace period for graduates to find a job. Nonfederal loans also have very strict rules on how one has to pay back a loan.
The Perkins Loan actually expired in September of 2014, but Congress agreed on a year extension for the program. However, the year is almost up and Congress still has not created a solution to this problem. If they do not by the 30, it will be too late.
Meghan Flores of the St. Kate’s financial aid office had a lot to say about the expiration of the Federal Perkins Loan.
“About 400 to 450 students per year at St. Kate’s receive funds from the Federal Perkins Loan program. If the program does expire, this will be a devastating loss,” said Flores. “The University awards about 1.1 million dollars per year to students through the Perkins program.”
A couple of students at St. Kate’s who receive the Federal Perkins Loan are worried about what will happen if Congress misses the deadline. Flores advised Perkins Loan borrowers at St. Kate’s to work with their financial aid counselor to understand the impact on their individual financial aid award. Any student who has not yet applied for a Perkins Loan needs to do so by Sept. 30.
“If the program does expire, the financial aid office will work with individual students to help them understand their options. Some students will be eligible to continue receiving the loan through a narrow grandfathering provision that allows for later Perkins Loan disbursements. Students who do not qualify for the grandfathering provision should consider applying for outside scholarships now to help fund the 2016-2017 academic year. We maintain a database of outside scholarships on the St. Kate’s financial aid website. Students might also consider the payment plan available through Student Accounts, a Federal Parent PLUS loan, and as an absolute last resort, private student loans.”
Some are worried that with the media focused on the 2016 presidential election or the Planned Parenthood debacle, the majority of the public won’t be paying attention to the Federal Perkins Loan program.
“I’m surprised there hasn’t been more coverage about the expiration of the program in the media. The Perkins Loan program is the nation’s longest running student loan program and has been part of the Higher Education Act since its inception in 1965,” Flores said.
It could be that there is not enough information about the expiration of the Federal Perkins Loan out there. The last time a major news outlet reported on this subject was back at the beginning of September, and the last time a political figure mentioned this was around June of 2015. The government financial aid website doesn’t even mention the expiring of the program.
Flores is urging students to contact their elected officials. Students can figure out who to contact and how through this website: http://www.gis.leg.mn/OpenLayers/districts/
Stay tuned for updates about this situation.