Perkins Loans

The future of the Perkins Loan program has been uncertain since the 2008 reauthorization of the Higher Education Act (HEA), when lawmakers included a September 30, 2014, termination date for the program with an automatic one-year extension to September 20, 2015. This “sunset” provision meant that institutions would no longer be authorized to issue Perkins Loan to new borrowers beginning in the 2016-17 academic year and beyond. Further, institutions would be required to slowly end their Perkins Loan programs and return their federal disbursements from their institutional revolving funds to the U.S. Treasury.
In preparation for the impending termination of the Perkins Loan program, the Department of Education used its limited executive authority to issue guidance which authorized institutions to continue lending to existing Perkins Loans borrowers.  According to the guidance, existing borrowers who met certain conditions would be eligible to continue receiving Perkins Loan disbursements until graduation. However, the grandfathering provisions only covered students already receiving loans—no new loans could be disbursed to new borrowers should the sunset date be breached.
Because Congress did not act before the September 30, 2015, sunset date, the Perkins Loan program officially expired. As a result, the incoming freshman class for the 2016-17 academic year would be the first since the 1959-60 class without a Perkins Loan program to help finance the pursuit of a college degree.
However, Perkins Loan advocates on Capitol Hill did not allow the program to die quietly. In fact, due to a well-coordinated and inclusive campaign to save the Perkins Loan program, lawmakers on Capitol Hill have since passed a law that revises the Perkins Loan program for two additional academic years. The details of that package are outlined below.



The Perkins Loan program provides low-interest loans of up to $5,500 per year to students with demonstrated need. Similar to SEOG, Perkins Loans are an important piece of the campus-based federal aid model, which gives flexibility and discretion to institutional financial aid officers to determine which students with demonstrated need receive Perkins Loans.  In order to participate in the Perkins Loan program, institutions must have matched at least 33% of the funds appropriated by the federal government. 
Approximately 500,000 students received Perkins Loans in the 2013-14 academic year, totaling more than $1 billion.  

Recent Legislative Changes & Future of the Program


On December 18, 2015, President Obama signed into law the Higher Education Extension Act, which included the following changes to the Perkins Loan program:
New graduate students will be ineligible to receive a Perkins Loan beginning in the 2016-17 academic year. However, graduate students currently receiving a Perkins Loan will be grandfathered and eligible to receive a Perkins Loan for one additional academic year (through September 30, 2016).
Undergraduate borrowers currently receiving Perkins Loans must exhaust their subsidized Stafford Loan maximum award before becoming eligible to receive a Perkins Loan. Undergraduate borrowers receiving a Perkins Loan for the first time, beginning in 2016-17, must exhaust both subsidized and unsubsidized Stafford Loan eligibility before receiving Perkins Loan eligibility.
Restrictions have been placed on the Secretary to prevent the Department of Education from enacting future grandfathering provisions. Once this two-year deal expires, the Perkins Loan program will terminate, absent further congressional action.
NAICU has signed on to a community letter authored by ACE that was sent to Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) of the Senate Health, Education, Labor, and Pensions Committee. While the letter offers thanks and appreciation to both senators for their bipartisan commitment to extending the Perkins Loan program, it is not an endorsement of the legislation.

As Congress moves to the reauthorization of the Higher Education Act, lawmakers will have the chance to revisit the Perkins Loan program. It is the hope of many in the higher education community that Congress will permanently extend the Perkins Loan program, and reverse the tightened eligibility standards contained within the current extension. Such changes include reinstating graduate students for Perkins participation, and a recommitment to the flexibility traditionally provided to financial aid administrators in the program.

What You Can Do

Contact your elected officials to:
  • Emphasize the importance of the Perkins Loan program as a means to help American students finance their pursuit of higher education.  
  • Urge them to fully reauthorize the Perkins Loan program and preserve the flexibility of the campus-based aid programs. 
  • If your institution packages Perkins Loans for graduate students, stress the importance of reinstating graduate students for Perkins Loan eligibility.

NAICU Contact 

Tim Powers: