Senate strikes deal that could bring Perkins Loan program back from dead
More than two months after the Senate blocked legislation to extend a federal aid program that helps some of the nation’s neediest students, legislators struck a deal Tuesday that could temporarily revive the program.
The Perkins Loan program expired at the end of September after lawmakers failed to act on a measure that would have extended the program for a year. The chair of the Senate Education Committee, Lamar Alexander, was instrumental in blocking the extension legislation, and wanted to eliminate Perkins loans in order to simplify federal aid.
To get Alexander’s approval to continue the program, lawmakers created new restrictions on who’s eligible for the loans. Beginning in the 2016-2017 school year, graduate students can no longer apply for the loans. Undergraduate students will also need to hit the borrowing limit on federal Stafford loans before the government will award them a Perkins loan. Students who already receive loans aren’t subject to this criteria.
The new bill would authorize new Perkins loans for undergraduate students through the end of September 2017. Because it eliminates eligibility for graduate students, only graduate students who already have an existing Perkins loan can keep receiving them until September 2016.
The Perkins loan program was created in 1958 to provide low-interest loans to students, and provided $36 billion in aid to 30 million low-income borrowers over the course of its lifetime. The loans have no fees and offer a longer grace period for repayment than other federal loan programs. Unlike the government’s direct loan program, which requires payment six months after graduation, the first payment for the Perkins program isn’t due until nine months after graduation.
In the 2013-14 school year, 540,000 students received Perkins loans. In the same year, Harvard gave students $9.4 million in Perkins loans. This year, more than 1,600 UMass students benefitted from the program for a total of $3 million.
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