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The federal campus-based Perkins Loan Program is in doubt. In recent years, it has been funded solely by repayments of previously issued Perkins loans. Due primarily to unreimbursed loan cancellations in recent years, and the fact that capital contributions haven’t been made to the program since 2004, repayments have been down; this has reduced the availability of funds for the program.

The Perkins program fills a sort of “donut hole” of need for low- and middle-income students who cannot get private education loans because they don’t have strong enough credit; but at the same time their families make a little too much for Pell Grand eligibility. These supplemental loans can make the difference between completing a college education or not.

The Coalition of Higher Education Assistance Organizations (COHEAO) would like to help. Last Friday the group submitted a memo to the House Committee on Education and the Workforce, titled “Federal Campus-Based Student Aid Programs: A New Approach.” Their suggestion? An approach called “Campus Flex,” which the organization says will better serve students.

The primary difference between this new approach and current law is that it offers schools flexibility in how to allocate collected Perkins Loan interest. The group believes this flexibility acknowledges the importance of all of the campus-based loan programs (Perkins, Supplemental Educational Opportunity Grants (SEOG), and Work Study) but allows schools to make sure aid is provided to the students who need it most and in the format that best benefits the student and the college.

According to Harrison Wadsworth, COHEAO’s Executive Director, the Association will be speaking with the Committee about the proposal, and likely will submit additional proposals as the process of reauthorizing the Higher Education Act moves forward in the coming years. Yes, that was “years.” Last time, Congress was to complete reauthorization by September 2004, but after approximately 20 extensions finally completed the process in August 2008. At that time, it was a six year reauthorization. According to Wadsworth, the current Act expires on September 30, 2014 – however there is an automatic extension to September 30, 2015.

Gail McLarnon, Director of the Policy Coordination Group for the U.S. Department of Education, speaking in late July at COHEAO’s mid-year conference, stated clearly that for now, the Perkins Loan program is still active and to the extent schools have funds, they should be actively making loans to students.

Read the full text of the COHEAO memo here.


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