Renewed almost without question since establishment in 1958, the Federal Perkins Loan Program — providing loans that aid payment in higher education — was unexpectedly allowed to lapse on September 30, 2015. Perkins is reported as the “government’s oldest student loan program.”
H.R. 3594, which would have renewed the loans program, passed the House but failed to be brought to the floor in the Senate. The defeat is accredited to Sen. Lamar Alexander (R-TN) who has regularly expressed the belief that specifically eliminating the Perkins Loan could streamline the government’s student loan programs.
Alexander was elected as chair of the Senate Health, Education and Labor committee in January 2015 and immediately pointed out why such streamlining is necessary. About half of the 20 million American families with students in college, he said on the Senate floor, “have a federal grant or loan to help pay for college.” The problem, he said, is that the “Federal application form for grants and loans for colleges is 108 questions.”
That’s why, Alexander continued, at another committee meeting over a year ago he was impressed upon hearing “four witnesses say we only needed two questions to answer 95% of the information we needed to know,” to make a student grant or loan feasible. Instead of the Perkins Loan, Alexander proposed the two-question application recommended known as “Fast Track” in S. 108.
With the Senate defeat, Rep. Mike Bishop (R-MI8), sponsor of the Perkins renewal bill, said in a press release, “Congress should be making it easier, not harder, for students to make their college goals a reality. That includes making college more affordable and simplifying our financial aid system for every American.”
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Dec 19, 2015.
(This measure has not been amended since it was passed by the Senate on December 16, 2015. The summary of that version is repeated here.)
Federal Perkins Loan Program Extension Act of 2015
(Sec. 2) This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to extend the authority of institutions of higher education (IHEs) to disburse Federal Perkins Loans to new undergraduate borrowers through September 30, 2017. A student must first exhaust Federal Direct Subsidized and Unsubsidized Stafford Loan eligibility.
IHEs may continue to disburse Perkins Loans to current undergraduate borrowers through September 30, 2017. A student must first exhaust all Federal Direct Subsidized Stafford Loan eligibility.
IHEs may continue to disburse Perkins Loans to certain graduate borrowers through September 30, 2016, to enable students to continue or complete an academic program. A student must have received a Perkins loan prior to October 1, 2015.
The bill prohibits Perkins Loan disbursement beyond September 30, 2017.
It also prohibits authorization of additional appropriations for the Federal Perkins Loan program beyond September 30, 2016.
Beginning October 1, 2017, each participating IHE must pay to the Department of Education: (1) a portion of the federal share of the balance of its Perkins Loan funds; (2) a portion of the Perkins student loan payments, including principal and interest, received by the institution; and (3) a capital distribution from its Perkins Loan fund.
(Sec. 3) The bill also expands disclosure requirements for IHEs that participate in the Federal Perkins Loan program.
Specifically, prior to Perkins Loan disbursement, an IHE must provide notice and explanation to all borrowers regarding unavailability of future Perkins loans, limited Perkins loan repayment and forgiveness options, and Direct Loan consolidation options. Also, an IHE must provide notice and explanation to new and current undergraduate borrowers regarding a comparison of Perkins and Direct loan interest rates.