As the UW-Madison community settles back into campus life for another school year, thousands of students are facing the possible elimination of one of the oldest federal loan programs in the country.
UW-Madison is one of approximately 1,700 public and private U.S. colleges and universities where low-income undergraduate and graduate students borrow money from their schools through the Federal Perkins Loan.
However, this option may soon expire. Without congressional approval to reauthorize the Federal Perkins Loan, the program will end September 30 of this year.
UW-Madison Director of the Office of Student Financial Aid Susan Fischer said she is not sure exactly why the loan is facing cancellation, but said she believes the funds could be funneled toward the national debt.
Fischer is calling for an extension of Perkins Loans at least until the next reauthorization of the Higher Education Act, which is likely to occur during the 2016 presidential election.
“This program has to be reauthorized every so many years ... it keeps disappearing on so many presidents’ radars,” Fischer said. “It absolutely is not a Democrat or Republican thing.”
Nearly 5,000 UW-Madison students enrolled in the Perkins Loan Program during the 2014-’15 academic year, making the university the highest lending institution of Perkins Loans within the UW System.
U.S. Reps. Mark Pocan, D-Wis., and Luke Messer, R-Ind., joined forces with UW System President Ray Cross and various chancellors in support of maintaining Perkins Loan.
Cross encouraged U.S. Rep. Reid Ribble, R-Wis., to co-sponsor the resolution in a July 15 release.
“The Federal Perkins Loan program has made higher education possible for thousands of
Wisconsinites and millions of Americans,” Cross said in the release.
The Board of Regents discussed the potential cancellation of the program in a 2015 UW System document, detailing the importance the Perkins loan holds for college students.
Elimination of the program could mean “future students will not be able to receive these loans that have favorable interest rates, repayment requirements, and loan forgiveness options,” according to the document.
Pocan is scheduled to hold a press conference Tuesday to call on Congress members to reauthorize the loan program.
“The Perkins Loan Program is an important tool to help make college more affordable for all,” Pocan said in a statement. “Perkins Loans are an essential aspect of ensuring college is both accessible and affordable for all students."
If Congress cancels the Federal Perkins Loan, students could still receive financial support from this program for the 2015-16 year, as long as they complete all necessary paperwork and have the loan disbursed and processed by the Office of Student Financial Aid and the Bursar’s Office by September 30.
Fischer said 99 percent of UW-Madison students fully paid their loan payments during the past academic year, which she attributes to the student-university relationship inherently required by the loan.
“Because they’re paying us back, they feel an obligation. They’re paying UW-Madison back,” Fischer said. “You feel closer to Madison than you do the Department of Education or some payment center. We think there’s a stronger emotional connection.”
The program works on the basis of the loan recipients’ payments, which currently accrue five percent interest annually, being “recycled” back into the loan fund as they are repaid each year.
Fischer explained that this “recycling” of funds means the federal government has not had to give UW-Madison new money for Perkins Loan since 2006. Currently, the loan sits at $10,058,880, with 33 percent contributed by UW-Madison.
“I just don’t see why. Why are you killing this program?” Fischer asked. “Show me another fund that has rotated dollars several times with so little expense and [helped] so many people.”
