Tester seeks to save Perkins loans for needy Montana college students
The federal Perkins student loan program that has helped thousands of Montana college students appears to be dead, but Montana Democratic Sen. Jon Tester is trying to bring it back to life.
Tester is urging his U.S. Senate colleagues to reauthorize federal Perkins loans to help low-income students attend college.
The House voted to reauthorize the loan program before it expired Sept. 30, but in the Senate it was blocked by one key member, Sen. Lamar Alexander, a Republican from Tennessee.
Alexander, who chairs the Senate Committee on Health, Education, Labor & Pensions, is seeking to streamline the student loan system. He called the Perkins program “outdated and unnecessary.”
Tester’s office said Monday that more than 3,000 students in Montana’s University System receive Perkins loans.
“Higher education is the best way to get a good job and get ahead in life, and it shouldn’t just be available to those who can easily afford it,” Tester said in a news release. “Reauthorizing Perkins loans will ensure that more Montana students can attend college.”
At Montana State University, approximately 2,000 students out of the total 15,688 enrollment are receiving Perkins loans, said Tracy Ellig, MSU spokesman.
MSU’s Perkins loans total $3 million, or an average of $1,500 per student, Ellig said.
The Perkins loans may seem relatively small compared to more than $37 million MSU students received from all need-based student loans in 2014.
But they go to “students who have some of the greatest financial need,” Ellig said. “The $1,500 per student per year can mislead people into thinking it isn’t a big deal. But for those students receiving it, it is a very big deal.”
MSU is “quite concerned” about the impact on needy students, who are often the first in their families to attend college, he said. And the Bozeman campus has no pot of money big enough to fill a $3 million hole.
For the MSU Foundation to help, Ellig estimated it would have to raise $90 million to $100 million in endowed funds to generate enough interest each year to replace the $3 million. He added the loss would be felt at every Montana campus, not just Bozeman’s.
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At MSU, financial aid advisers were aggressive in telling students eligible for Perkins loans that they had to complete their paperwork before a June 30 deadline, Ellig said. Those students receiving Perkins loans this fall are “grandfathered in” and can continue to receive loans for five years. But students starting next fall won’t have access to the program.
Perkins loans are the nation’s oldest loan program, created in 1958 as the Defense Student Loan Program in response to the Russian Sputnik satellite scare. Since then Perkins loans have provided $36 billion to 30 million students, aiming to help those with “exceptional financial need,” The Chronicle of Higher Education reported.
Nationally, supporters of Perkins loans point out that the loans help 500,000 students a year with more than $1 billion in loans. The loans have a fixed 5 percent interest rate, interest is not charged while a student is in school, and loans can be forgiven for those who go into certain professions.
However, critics argue that roughly a third of loans go to students from families earning more than $60,000. They contend that loans have gone disproportionately to “elite” Northeast colleges, rather than the West and South, based on where college students were attending school 30 years ago.
And critics point out that Congress has let the program whither, providing no new money for the past decade. Perkins is a revolving loan fund that uses money repaid by previous students to make new loans. As a result, the Perkins program helps about half as many students today as 40 years ago.
Alexander and other critics argued the $5 billion needed to extend Perkins for 10 years would be better spent on expanding Pell grants. However, as The Chronicle of Higher Education reported, there is “no new money in sight.”