selmeralto
02-04-2005, 04:47 PM
Bush Budget Will Propose a Recall of Federal Funds From Perkins Loan Program, Lobbyists Say
"The Bush administration's budget for 2006, due out on Monday, could mean the end of the Perkins loan program, college lobbyists predicted today.
While details of the president's proposals are not yet available, higher-education advocates said that the president would ask Congress to recall the federal share of institutions' revolving loan funds. The funds, which are made up of federal "capital contributions," institutional matches, and repaid Perkins loans, are used to make new loans to students from low-income and middle-income families.
Colleges made $1.263-billion in loans to 673,000 borrowers through the Perkins program in 2004. The recall of the federal share, which would be phased in, would mean that "there would be no [federal] money to lend out," said Thomas E. Schmidt, associate director of the office of student finance at the University of Minnesota-Twin Cities, which awarded $6.4-million in Perkins loans to 3,300 students last year. "We would have nothing to give to our students."
Mr. Schmidt said many of the Perkins recipients at his institution had already "maxed out" on federally guaranteed student loans, and had been turned down for private loans because they had not built up credit histories.
The Bush administration is likely to shift the recalled Perkins money into the Pell Grant program, which has a $4.3-billion shortfall, college lobbyists said. President Bush announced last month that he would seek to raise the maximum Pell Grant by $500, to $4,550, over the next five years, and to eliminate the shortfall by making changes in the federal guaranteed-student-loan program. He did not mention the Perkins program in his remarks.
But higher-education advocates said the Perkins program had been in the administration's cross hairs for some time, noting that the president and Congress provided no new money for capital contributions in the 2005 fiscal year. In that budget, the department said the loans were "no longer necessary" because the revolving funds "will continue to support more than $1-billion in new Perkins loans each year."
Harrison M. Wadsworth, executive director of the Coalition of Higher Education Assistance Organizations, said that it would be a "mistake" to transfer the revolving funds to the Pell program because the loan program is self-sustaining and the federal contribution "leverages" a 25-percent institutional match -- each federal contribution of $3 draws a $1 match from the college.
"The grant is a one-time shot," said Mr. Wadsworth. "What do you do next year? I hope Congress recognizes that students need the Perkins program."
The Perkins program also offers loan forgiveness to borrowers who work in teaching, law enforcement, nursing, or other high-need fields after they graduate."
- The Chronicle of Higher Education, 4 February 2005
"The Bush administration's budget for 2006, due out on Monday, could mean the end of the Perkins loan program, college lobbyists predicted today.
While details of the president's proposals are not yet available, higher-education advocates said that the president would ask Congress to recall the federal share of institutions' revolving loan funds. The funds, which are made up of federal "capital contributions," institutional matches, and repaid Perkins loans, are used to make new loans to students from low-income and middle-income families.
Colleges made $1.263-billion in loans to 673,000 borrowers through the Perkins program in 2004. The recall of the federal share, which would be phased in, would mean that "there would be no [federal] money to lend out," said Thomas E. Schmidt, associate director of the office of student finance at the University of Minnesota-Twin Cities, which awarded $6.4-million in Perkins loans to 3,300 students last year. "We would have nothing to give to our students."
Mr. Schmidt said many of the Perkins recipients at his institution had already "maxed out" on federally guaranteed student loans, and had been turned down for private loans because they had not built up credit histories.
The Bush administration is likely to shift the recalled Perkins money into the Pell Grant program, which has a $4.3-billion shortfall, college lobbyists said. President Bush announced last month that he would seek to raise the maximum Pell Grant by $500, to $4,550, over the next five years, and to eliminate the shortfall by making changes in the federal guaranteed-student-loan program. He did not mention the Perkins program in his remarks.
But higher-education advocates said the Perkins program had been in the administration's cross hairs for some time, noting that the president and Congress provided no new money for capital contributions in the 2005 fiscal year. In that budget, the department said the loans were "no longer necessary" because the revolving funds "will continue to support more than $1-billion in new Perkins loans each year."
Harrison M. Wadsworth, executive director of the Coalition of Higher Education Assistance Organizations, said that it would be a "mistake" to transfer the revolving funds to the Pell program because the loan program is self-sustaining and the federal contribution "leverages" a 25-percent institutional match -- each federal contribution of $3 draws a $1 match from the college.
"The grant is a one-time shot," said Mr. Wadsworth. "What do you do next year? I hope Congress recognizes that students need the Perkins program."
The Perkins program also offers loan forgiveness to borrowers who work in teaching, law enforcement, nursing, or other high-need fields after they graduate."
- The Chronicle of Higher Education, 4 February 2005