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Perkins Loan Program Good Until 2015

NAICU Washington Update

March 4, 2011

Colleges participating in the Perkins Loan Program received some welcome news recently, when the Department of Education took a liberal interpretation of when the program would terminate if Congress doesn't take action. Under the Department's ruling, the program can continue until as late as September 30, 2015 - the same termination date as for all other student aid programs under the normal reauthorization cycle.

The announcement settles an ongoing debate since reauthorization of the Higher Education Act in August 2008. The HEA included two different program termination dates. The first date - October 1, 2012 - is the date given for the return of federal Perkins loan funds to the Department. The second date - September 30, 2014 - is the end date for the authorization for the Perkins Loan Program.

The Department has now published its interpretation, along with its rationale, confirming recent oral pronouncements. The letter also explains that program authorization could actually be extended for an additional year, i.e., to 2015, under the General Education Provisions Act.

The published interpretation is a welcome relief for institutions that participate in this valuable program.

The president's budget for FY 2012 includes an eight-fold increase in Perkins lending authority. The envisioned program would be administered by the Department as a direct loan, with no in-school interest subsidy and an interest rate of 6.8 percent. As current Perkins loans are repaid, institutions would return the federal contribution portion to the Department, but would keep their historical institutional contributions. The expansion of the program would allow many more students at many more institutions to take advantage of Perkins loans, reducing their need for expensive private label loans.

It's not yet known, what formula the Department will propose for distributing the new money, but the administration has indicated it wants the funding to go to schools with good track records in serving and graduating low-income students. NAICU has been working with a group of interested associations and colleges to extend and expand Perkins.

Contact

Maureen Budetti
maureen@naicu.edu