Here are the highlights from the Student Aid and Fiscal Responsibility Act, as it pertains to the Perkins Loan program:
- New name for Perkins Loans: Federal Direct Perkins Loans
- Terms and Conditions: Unless otherwise specified will be similar to Unsubsidized Stafford Loans.
- This effectively eliminates the interest rate subsidy during the in-school period that Perkins Loan borrowers currently enjoy
- A House Committee on Education aide indicated that legislators are interested in working with the financial aid community on finding a compromise solution to this interest rate subsidy issue.
- Loan limits are unchanged: According to FinAid.org, "the program limits are $5,500 per year for undergraduate students and $8,000 per year for graduate students, with cumulative limits of $27,500 for undergraduate loans and $60,000 for undergraduate and graduate loans combined."
- Interest rates: Fixed at 5%
- Annual loan authority: Not to exceed $6 billion for 2010-11 award year
- Allocations of Perkins Loan funds
- 1/2 based on self-help need amount of institution
- Detailed formulas provided in the bill
- 1/4 based on low tuition incentive amount of institution
- Detailed formulas available in the bill
- 1/4 based on the ratio of Pell Grant recipients who earned degree at the specific institution divided by the sum of Pell Grant recipients at all participating institutions who earned degrees.
- 1/2 based on self-help need amount of institution
- Agreements to participate in Perkins Loan program have the following provisions:
- ‘‘For the establishment and maintenance of a Direct Perkins Loan program at the institution under which the institution shall use loan authority allocated under section 462A to make loans to eligible students attending the institution;
- That the institution, unless otherwise specified in this subsection, shall operate the program consistent with the requirements of agreements established under section 454;
- That the institution will pay matching funds, quarterly, in an amount agreed to by the institution and the Secretary, to an escrow account approved by the Secretary, for the purpose of providing loan benefits to borrowers;
- That if the institution fails to meet the requirements of paragraph (3), the Secretary shall suspend or terminate the institution’s eligibility to make Federal Direct Perkins Loans under section 455A until such time as the Secretary determines, in accordance with section 498, that the institution has met the requirements of such paragraph; and
- That if the institution ceases to be an eligible institution within the meaning of section 435(a) by reason of having a cohort default rate that exceeds the threshold percentage specified paragraph (2) of such section, the Secretary shall suspend or
terminate the institution’s eligibility to make Federal Direct Perkins Loans under section 455A unless and until the institution would qualify for a resumption of eligible institution status under such section.’’
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Check out the results from the recent SLA Flash Survey which focused on the Perkins Loan program.
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