Student loan cut worries colleges
University leaders urge extension of the Perkins loan
Concerned about the possible expiration of a federal loan program for low-income students, Joseph E. Aoun, Northeastern University president, is leading a coalition of university presidents urging President Obama’s administration to protect the low-interest loans.
More than 30 university presidents, including three from the Boston area, signed a Feb. 9 letter to US Education Secretary Arne Duncan expressing their concerns over the looming end of the Federal Perkins Loan Program. The program is set to expire in 2014.
“Ending this program would be directly at odds with President Obama’s ambitious goal for the US to have the highest proportion of college graduates in the world by 2020,’’ said the letter signed locally by Aoun; Robert A. Brown, president of Boston University, and Lawrence S. Bacow, president of Tufts University. “We want to work with you to find a solution.’’
The university leaders said in the letter that students who depend on the funds could be forced to drop out of college or take high-interest loans when the program expires. Some high school seniors might forgo college all together, the letter said.
“We need to find ways for fam ilies to go to college, and not curtail the opportunities for that,’’ Aoun said. He said Perkins loans are a critical bridge in education funding gaps.
Created by Congress in 1958, the Perkins program provides low-interest (5 percent) loans to low-income undergraduate and graduate students. Distributing the money is left to the discretion of universities, which often use it to fill gaps in students’ financial aid packages, administrators said.
The program annually awards about $1 billion in need-based aid to more the 500,000 students nationwide, according to the US Department of Education. Last year, loans averaged $2,125 per student, though undergraduates can borrow up to $5,500, the department said.
Despite the fact that Congress has not added capital to the program since 2004, more than 1,800 colleges and universities participated in the program last year, underscoring the higher education community’s commitment to the program, the letter said.
Since the federal government stopped adding money to the program, new loans made in the program are being funded by recycling repayment funds, said BU spokesman Colin Riley. Each time a student makes a loan payment, that money is used to pay for new loans, Riley said.
Last year, about 3,250 BU students, or about 10 percent, received $6 million in Perkins loans, he said.
About 2,060 Northeastern students were awarded $4.5 million in Perkins loans last year, and more than 600 Tufts students received the federal assistance, administrators said.
“The issue that we’re facing is uncertainty,’’ Aoun said. “Families need to plan ahead. Typically, a college education is a minimum of four years. They need to know that they can continue to count on that.’’
Department of Education spokeswoman Jane Glickman said Friday that her agency has yet to receive the letter.
A proposal to increase the Perkins loan program from $1 billion per year to $6 billion so more schools could participate was cut from legislation to overhaul student loans last year. But Glickman said the administration remains committed to improving and expanding the program, and plans to offer new details of its current proposal tomorrow as part of the president’s 2012 federal budget package.
Akilah Johnson can be reached at email@example.com.