WASHINGTON − High school seniors hoping to benefit from the nation’s oldest federal student loan program are in for a big blow: It’s going away for now and may not come back.
The Perkins Loan program, which was used by more than 15,000 Washington students last year, expired Wednesday when reauthorization efforts failed in the Senate.
The federal loans, first provided in 1958, are reserved for students with exceptional financial need. They carry low interest that is not charged while the student is in school. Borrowers have a grace period of nine months after graduation or leaving school before repayment starts.
Unless the program is brought back, students who haven’t received one of the loans in the past won’t be able to get one.
A student who received money through the loan program prior to June 30 is grandfathered in and will be eligible for a Perkins through September 2020 if they remain at the same institution.
Students who received their first Perkins Loan disbursement for the current school year before Thursday may receive money through next June.
The Perkins program operated through shared risk between the federal government and universities. A school provided one-third of the amount, and when borrowers repaid their loans, that money went into a revolving fund for future loans.
About 1,500 colleges and universities participate in the program. The federal government has not contributed money into the loans since 2004, but schools have used their own contributions and students’ loan repayments to maintain funding.
Undergraduate students were allowed to receive up to $5,500 per year from the program, with a cap of $27,500. Graduate students were eligible for as much as $8,000 per year, and if combined with loans during their undergraduate studies, could receive a total of $60,000.
Last year, the program lent about $2.6 million to Washington State University students, $2.5 million to Gonzaga University students and nearly $1 million to Eastern Washington University students.
Authorization ran out as lawmakers tried to rewrite the Higher Education Act, which controls all federal student loans.
Some lawmakers voiced concerns about how complicated federal student aid programs are, suggesting that money devoted to Perkins loans could be funneled into other programs.
“Our goal is to simplify the system, make it easier for students to apply for grants and loans … and the Perkins loan is not as effective a loan in meeting those goals as the other loans that we have,” said Sen. Lamar Alexander, R-Tenn., chairman of the Health, Education, Labor and Pensions Committee, on the Senate floor.
A problem with the program is that the government pays the interest while each recipient remains enrolled, Alexander said. This could cost the government $5 billion over 10 years, money that could be used for Pell Grants, he added.
Supporters of the program argued there’s no plan in place to redirect that money for student aid.
“Perkins loans have been a critical tool, providing a low-cost, flexible option to help pay for college,” Sen. Patty Murray, D-Wash., said Wednesday in a statement. “It is unfortunate that new students could face uncertainty this year by letting this program lapse.”
The reauthorization effort failed because of some Republican objections, Murray said.
“Students today face far too many barriers in getting to college and being able to afford it. We should not be putting one more barrier in the way,” she said in an interview.
The program still could be resurrected later in the year as Congress continues to work on the budget, Rep. Cathy McMorris Rodgers, R-Wash., said after the bill failed in the Senate.
Kevin Graeler, a student in the University of Missouri Washington, D.C., Reporting Program, is a correspondent for The Spokesman-Review.
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