WASHINGTON, DC – After months of urging following the program’s abrupt expiration in September, U.S. Senator Jack Reed today announced that Congress has passed a two-year extension of the popular Perkins Student Loan Program, a vital federal student lending program utilized by more than 9,000 students in Rhode Island to help them afford their college education.  The bipartisan Federal Perkins Loan Program Extension Act of 2015 breathes new life into the program until a long-term solution can be found as part of the reauthorization of the Higher Education Act.

The Perkins Loan Program, the nation’s oldest federal student loan program, has existed with broad bipartisan support since 1958 and has provided more than $28 billion in loans through almost 26 million awards to students in all 50 states.  In the last academic year alone, the program lent $1.1 billion to more than half a million students with financial need across more than 1,500 institutions of higher education.  For the 2013-14 school year, the program lent over $18 million to more than 9,000 Rhode Island students.

Reed called on Congress to revive the program this fall after political infighting and two failed extension votes led to its expiration on September 30th.  In October, Senator Reed helped to lead a bipartisan group of 54 Senators in demanding congressional leadership hold a vote and pass legislation to reauthorize the Perkins program as soon as possible.  This week, a compromise was reached and Congress voted to extend the life of the program for two more years.

“Perkins is a cost-effective program that has helped thousands of deserving students in Rhode Island finance their education, and I am pleased to see this lifeline for students and families come back to life.  While I am concerned about some of the eligibility changes included in the compromise legislation, this is good news for hardworking young people in need of assistance to afford college.  Any future changes to student loan programs should be handled more responsibly so families don’t face gaps in their ability to finance an education.  Congress should be working to make higher education more affordable and accessible for all students,” said Senator Reed.

The Federal Perkins Loan Program Extension Act of 2015 passed this week is a bipartisan compromise that extends the Perkins loan program for two years while altering the program’s eligibility requirements.  The deal will allow current and new undergraduate borrowers to complete the 2016-17 and 2017-18 academic years with the support of Perkins Loans.  The legislation also provides current graduate students with a Perkins Loan an additional year of eligibility, through September 30, 2016, but graduate students will  eventually be phased out of the program as part of the compromise.  Beginning in the 2016-2017 school year, graduate students can no longer apply for the loans and undergraduate students will need to hit the borrowing limit on federal Stafford loans before the government will award them a Perkins loan.  The bill also provides for a wind-down of the Perkins program in two years, as some Republicans prefer to dispense with the program permanently as part of a larger effort to streamline federal student aid.  

Perkins provides a low-interest rate of 5% to help undergraduate, graduate, or professional students with exceptional financial need afford their education.  No interest accrues until the student enters repayment, which starts after a nine-month grace period, giving the recent graduate time to get on his or her feet.  The Perkins Loan Program also encourages public service, offering generous loan forgiveness for many public sector careers, including for school librarians, something that Reed has long-championed.

A compelling feature of the Perkins Loan Program is that participating institutions must contribute their own resources – one dollar for every two federal dollars.  Congress has not contributed money to the program for about a decade.  Instead, the 1,500 schools that offer Perkins loans rely on their own contributions and repayment from prior recipients to fund the loans.  Many institutions, including colleges and universities in Rhode Island, have invested more than their legal obligation.  As students repay their loans, institutions are able to make new loans.  In other words, participating colleges and universities have a real stake in students being able to repay their loans, something that is missing from our other federal student loan programs, and something that Reed has argued should be more commonplace.

The measure now heads to President Obama, who is expected to sign the bill into law.

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