Late last week the Institute for College Access & Success' Project on Student Debt issued a white paper entitled Reasons & Recommendations for Retooling the Perkins Loan Program that makes numerous recommendations for the Perkins program, including removing Perkins loan collection responsibility from colleges.
The report says that colleges may be "tempted to use particularly aggressive collection tactics for Perkins loans in order to make loans to new students and because they are able to retain collection fees of up to 40%. The President's budget proposes merging Perkins administration into the U.S. Department of Education's existing infrastructure for other federal student loans. This would reduce the administrative burden on colleges and make it easier for schools with limited resources to participate in the program. It would also eliminate a potential conflict of interest by removing colleges from the role of loan collector."
Lauren Asher, president of the Institute, said yesterday, "Perkins loans are a relatively low-cost borrowing option, but the program's current design rewards colleges for raising prices while ignoring indicators of how well they serve their students. Our recent white paper suggested retooling the program to focus on schools that prioritize affordability and completion.
Asher praised the proposed Student Aid and Fiscal Responsibility Act saying it "expands and improves the Perkins Loan Program with incentives for colleges to keep students' costs down and raise graduation rates."
Asher suceeded Bob Shireman as President of the Institute for College Access & Success, an independent, nonprofit organization, earlier this year when Shireman left to become deputy undersecretary of education.
Publication Date: 7/17/2009