In danger without any action from Congress, a tentative deal to extend the Perkins Loan Program through September 30, 2017 has been passed and then signed by the President on December 18, 2015, saving the program for another two years. Named for exactly what it is, the Federal Perkins Loan Program Extension Act of 2015 is now law, but not without some controversy in the way financial aid professionals will be handling the program going forward.
Changes include eliminating the Perkins for new graduate students beginning in the 2016–17 award year, forcing undergraduate students to exhaust their Direct (Stafford) Loan eligibility before being allowed to utilize the Perkins Loan Program, and possibly ending the program altogether in September 2017 without another Act of Congress. Schools will also be responsible for notifying all recipients that the program is ending in 2017.
So while it was an olive branch extended to the aid community, what will fill the funding gap for the fall 2017 semester and beyond? Will students struggling to finance their education all be forced into higher-interest-rate private loans that require a credit check? NASFAA has come out with its own statement regarding
the passage of the bill: “While NASFAA is appreciative of the bipartisan effort to keep the program alive, we have expressed concern about the programmatic changes, particularly limitation of graduate student eligibility and the impact of the mandated packaging order on students and the slippery slope of a precedent that such provision would establish.”
How the new stipulations affect the way students are awarded and the funding levels schools have built up over the years remains to be seen. Will colleges be able to spend their entire allocation, now that they are hamstrung by the new Direct Loan rules? It will likely depend on a school’s cost of attendance, as it will be more difficult for a community college to award Perkins going forward than it may be for a more expensive, private school. At the end of the day, 539,000 students and their financial aid packages, along with $1.2 billion in funding, was, and in a way still is, at stake.