If the Perkins Loan, a federal institutional loan program, expires nation-wide Sunday, the nearly 4,000 UW-Madison students who were eligible that funding will have to find it elsewhere.
But according to Jeff Pfund, associate director of the Student Loan Servicing department at UW-Madison and UW-Green Bay, securing an alternative loan may not be that easy.
“We fear that if we lose the program, no long-term viable program is slated to replace the need. We worry many of these students will not qualify for private loans … if Congress does not act, our students will be left in a lurch,” Pfund said. “Perkins targets a very high need population.”
The program provided $25.5 million in financial aid to 13,627 UW System students each year, said Ray Cross, president of the UW System, in a statement Thursday. Of the total 30 public and private schools that participate in the program, half are within the UW System.
Perkins expired in 2015, but under an extension act, students already enrolled in it have continued to receive loans — however, if lawmakers in Washington fail to pass an additional extension by Sunday, funding for those students could disappear all together. Cross urged those lawmakers to draft legislation that would extend the program.
“For over 40 years, it has been a core program financially and philosophically. We worry that without Perkins, our students and families will see additional financial stress,” Pfund said.
According to Pfund, students who received Perkins Loans averaged $3,475 in Expected Family Contribution, a measure of their family’s ability to contribute to a year of post-secondary education. That’s less than the $5,157 average of Expected Family Contribution for students who receive Pell Grants.
“Students at this point have other options, but they won’t be as pretty and they won’t come with as nice of interest rates,” said Zachary Zimmerman, a student representative at the Office of Student Financial Aid, whose tuition is paid for in part by a Perkins Loan.
According to Zimmerman, the Perkins Loan program was different than other federal loan programs because of its low interest rates, which defer until a student has graduated. While most federal loans are directly distributed by the government, Perkins Loans were given to the universities, which in turn put the money toward students’ tuition. When alumni pay their loans, those funds are reloaned to current students.
“[Perkins Loans] were a good thing,” Zimmerman said. “The loan services were another option, they existed institutionally and they were self contained. If they weren’t causing the university any problems...I don’t know why [we are letting them expire].”
