Perkins Loan Program Receives Automatic One-Year Extension

The Perkins Loan Program, which has not received a Federal Capital Contribution (FCC) since fiscal year (FY) 2005 or cancellation reimbursements since FY 2010, received an automatic one-year extension through September 30, 2015, under section 422(s) of the General Education Provisions Act (GEPA). Prior to the extension, the program was authorized through September 30, 2014, under 461(b) of the Higher Education Act (HEA).

Unless Congress enacts legislation that specifically repeals the authorization of the program, the Perkins Loan Program will continue at least through the 2014-15 award year. Perkins guidance was released by the Department of Education (ED) in GEN-11-02. The operational details associated with the discontinuation of the Perkins Loan Program, if that ultimately occurs, are not yet known.

President Obama has proposed a new Perkins Loan Program through his last six budget requests. While the administration’s proposal has varied slightly from year to year the core provisions have remained the same: Under the president’s proposal schools would still have institutional authority over who receives the loans, but the volume of the Perkins Loan Program would expand significantly in order to allow more schools to participate; the loan would become unsubsidized with the interest rate tied to market rates and would have all other terms and conditions of an unsubsidized Stafford Loan. To date, there has been very little movement on this proposal from Capitol Hill, though the upcoming reauthorization could serve as an impetus for Congress to take it into consideration.

NASFAA’s Reauthorization Task Force also put forth recommendations related to the Perkins Loan Program in their preliminary report. The recommendation calls for amending, in two ways, the distribution of an institution’s Perkins fund in the event the program ceases to exist. The first would instruct the Secretary of Education to offset the amount of FCC to be returned to the federal government by the aggregate amount of unfunded reimbursement for cancellations. The second would ensure that institutional contributions made in excess of the minimum required or made when there was no new FCC are also offset so that the amount due to the federal government is not overestimated. 

NASFAA will continue to follow the Perkins Loan Program and will provide regular updates.

 

Publication Date: 10/2/2014


Mindy S | 10/2/2014 10:21:08 AM

Morphing the Perkins into an Unsubsidized loan is like trying to change an onion to an apple. No matter how you slice it, it stinks.This is particularly true for the rual community college student, where employment opportunities are limited and annual salaries have not kept up with the national averages. The cancellation options for students pursuing career programs are a life saver. Hospitals and jails exist in rual communities; allowing students to pursue those programs is providing students with the funding they need and not saddling them with excessive debt.

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