The Federal Perkins Loan Program, which died nearly three months ago, may be brought back to life — in altered form.
The U.S. Senate is expected to take up a bill as early as Wednesday that would revive and extend Perkins for two years, while limiting eligibility for the program. The proposed restrictions, which would cover the cost of continuing the program, include limiting it to undergraduates (though current graduate recipients could receive loans through the 2016-17 academic year) and requiring recipients to reach the borrowing limit on unsubsidized Stafford Loans before obtaining Perkins Loans.
Under the moribund program, graduate students could receive Perkins Loans and colleges could award the loans to students who had not yet exhausted their Stafford eligibility. Unsubsidized Stafford Loans currently carry higher interest rates than Perkins Loans, which were fixed at 5 percent.
Perkins advocates aren’t thrilled with the proposed eligibility changes, which would drive up the cost of borrowing for both undergraduate and graduate students (who will have to rely more on PLUS loans). In a blog post on Tuesday, the National Association of Student Financial Aid Administrators called the change requiring aid officials to award Stafford Loans first "a slippery slope."
Still, most advocates are willing to accept the restrictions if they allow the program to be revived.
"Tough decisions had to be made that no one likes in order to save the program," said Cynthia A. Littlefield, vice president for federal relations at the Association of Jesuit Colleges and Universities.
The original Perkins program lapsed on October 1, after Sen. Lamar Alexander of Tennessee blocked a House bill that would have extended it, calling the program "outdated and unnecessary." The proposed extension has Mr. Alexander’s support, though it’s unclear if lawmakers in the House of Representatives will agree to the changes he sought. If not, they may send a revised bill back to the Senate for further consideration.