The University could lose access to as much as $6.7 million in federal funding for student loans if Congress passes the federal budget released Monday by the Bush administration, said Kris Wright, the University’s Office of Student Finance director.
In the budget, President George W. Bush proposed the elimination of the Perkins Loan program, which aids students from low- and middle-income families.
According to the latest data from the Minnesota Higher Education Services Office, during the 2002-03 school year, 1,900 University students received a total of $4.8 million from Perkins Loans.
Perkins Loans are need-based loans with a fixed interest rate that do not require student or family borrowers to have established credit histories.
Wright said many students who get Perkins Loans could not afford college without them.
Even with the maximum amount of state grants, work study and other subsidized loans, she said, families that make less than $50,000 would need to contribute almost $8,000 a year toward their children’s education.
“It can be a large gap for students,” Wright said.
She said students from low-income families without good credit histories will suffer without the Perkins Loan program.
“It would make it very difficult for students who aren’t credit-worthy to afford college. I don’t know if there are any other resources for those students,” she said.
But Clara Lovett, president of the American Association for Higher Education, said it’s too early to tell the impact Bush’s budget will have.
“Some legislation is so complicated that you really have to read the fine print,” Lovett said.
“Sometimes, one program is reduced or cut, but another program with the same function is made.”
But Wright said she has not heard of any programs proposed by the Bush administration that would replace Perkins Loans.
Tricia Grimes, a policy official with the Minnesota Higher Education Services Office, said cutting the Perkins Loan program could have advantages.
Grimes said it would make the financial-aid process less complicated for students and universities. Many students take out more than one type of loan, she said.
In addition to eliminating Perkins Loans, Bush is proposing to increase the borrowing limits for the Stafford Loan so students could use it to pay for a larger portion of their education.
“Any way to simplify the process is beneficial, and this may be a small step in the right direction,” Grimes said.
One justification for cutting Perkins Loans is that they serve a relatively small number of students, Grimes said. In 2002-03, 14,000 students in Minnesota received Perkins Loans, and 90,000 received Stafford Loans, Grimes said.
Yet, Rep. Betty McCollum, D-Minn., said that for thousands of Minnesota students, the loss of Perkins Loans could mean losing the opportunity to go to college.
“A Perkins Loan can mean the difference between attending and not attending college for too many college students who are scraping together the dollars needed to afford the ever-increasing price of tuition,” she said in a prepared statement.
Kent Ortner, president of Students Against Political Ignorance, said that although he is personally against cutting the Perkins Loan program, he thinks there is a legislative reason for it.
“The Bush administration is trying to cut down the bureaucracy (and cost) for higher-education institutions,” Ortner said.
Whether they are for or against Bush’s proposal, most agree it is still early in the game.
John Engelen, director of Federal Relations for the University, said there will be much debate before any proposals are passed.
“My hunch is that the budget Congress passes will be significantly different from what Bush proposed,” Engelen said.
