Oldest federal loan is gone

The Perkins Loan, a federal aid program that provides financial assistance to nearly half a million college students expired on September 30 after the Senate blocked legislation to extend it.

According to The Washington Postobjection to the program was endorsed by Sen. Lamar Alexander (R-Tenn.), chair of the Senate Health, Education, Labor and Pensions committee. Alexander called the program ”outdated and unnecessary.”

Founded in 1958, Perkins is the oldest federal loan program in the United States, providing low interest rates to help undergraduate and graduate students with “exceptional financial need.” The loans have no fees and offer a longer repayment period of nine months after graduation when compared with other federal loans that start at six months after graduation.

Around 1,500 colleges, including UTM, are active in the Perkins Loan program. According to USA Today, for the 2013-14 school year, the program lent more than $1.2 billion to 539,000 students.

Universities are now not allowed to authorize new Perkins loans. However, students who are currently enrolled who received a loan before June 30 will still be able to take out another for up to five years.

Alexander wants to limit federal college aid to one grant-the Pell grant-and one loan program.

“Reauthorizing the Perkins loan will cost $5 billion over 10 years”, Alexander said.

All is not yet lost. Anthony Richey, senior director of financial aid at Auburn, said his school along with many others is hoping that the program still could be renewed.

“There’s still a possibility that Congress could bring it back during the re-authorization of federal aid or they could try to bring it back when they create the new budget (during federal budget hearings on Dec. 11),” Richey said. “However things are kind of grim as far as whether that will happen or not.”

 

 

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