A decades-old federal student loan program that caters to low-income students has been discontinued after Congress didn’t pass a bill to extend it.
After this year, students will no longer be able to participate in the Federal Perkins Loan Program. Lawmakers in the U.S. House of Representatives passed a bill that would have extended the program for an additional year, but the U.S. Senate didn’t come to a consensus on the measure.
Undergraduates offered the loan, which has existed since the 1950s, were allowed to receive up to $5,500 a year while graduate students receiving the loan could accept up to $8,000 a year. Interest on Perkins Loans is fixed at 5 percent.
“Right now there is nothing to replace this program,” said Thomas Schmidt, associate director of student account assistance and third-party billing at the University of Minnesota. “Students that relied on [the loan] will not have any other money from schools to replace it, and schools won’t have money to give them to make up for loss of the loan.”
Although the federal government will no longer fund the program, individual colleges are able to disburse limited loans from the Perkins loan fund until 2016. The University is one of about 1,700 higher education institutions that offer the Perkins Loan, which differs from other federal loans because debt accrued can be cancelled.
Recipients of the low-interest, subsidized loan at the University are given an average loan of $2,000. Schmidt said Perkins Loan students at the University are often financially the neediest.
“Higher education can create a vital role in lifting people out of poverty and setting them on the pathway to success,” Rep. John Kline, R-Minn., who chairs the House Committee on Education and the Workforce, said in a press release.
A group of House lawmakers, including Kline, had pushed for the program’s extension but had their efforts thwarted in the Senate, where the bill died.
In a press release, Rep. Louise Slaughter, D-N.Y., who co-sponsored the House’s bill, said the loan program was a good investment because it was available to low-income students, had a low, capped interest rate and was administered by colleges.
“Students should be studying for their next exam, not worrying whether they can afford their next semester,” she said in the press release. “The loss of Perkins Loans [will be] be an unrecoverable blow to the 500,000 students across the country who rely on them.”