The U.S. Senate reversed course in December and agreed to extend the Perkins Loan program for two more years. Senator Lamar Alexander of Tennessee, chair of the Senate education committee, was clear that this should not be viewed as a permanent revival of Perkins. The extension is being positioned as a “managed shutdown” of the country’s oldest federal student-loan program.
The Federal Perkins Loan Program was established in 1958 to help students with limited means by providing low-interest funding in lieu of more costly private loans. The program was joint funded by the federal government and participating universities and was sustained by repayments made by Perkins borrowers.
Proponents of Perkins say it is a vital tool for ensuring access to higher education for the neediest of students. Critics say it is an outdated program that is adding unnecessary complexity to the financial aid system.
When Perkins winds down, what will be the impact on DePaul? While Perkins funding represents less than one-half of 1 percent of all the federal, state and institutional aid DePaul processes each year, it still amounts to $2 million dollars in revenue. According to Paula Luff, associate vice president of Enrollment Services in Enrollment Management and Marketing, DePaul has been working to minimize the impact of the program’s cessation.
“Over the past few years, the possibility of the program ending was becoming increasingly likely,” Luff explained. “We made the strategic decision to proactively wean off Perkins in preparation for this outcome. While we haven’t completely eliminated it, we have limited our exposure as an institution. More importantly, we’ve lessened the potential negative impact on our students.”
DePaul’s approach has been to only award Perkins on appeal instead of with the initial offer of financial aid. Additionally, the university has been increasingly leveraging other funding sources each year in the appeals process, to the point that no new Perkins loan borrowers were awarded for 2015.
Going forward, DePaul will replace the use of Perkins through some combination of an increased appropriation of institutional aid (grants and scholarships) and revising appeals award strategies.
In total, there are 507 DePaul students with Perkins loans. More than half of these students (263) are seniors while juniors and sophomores represent roughly one-quarter each (117 and 114, respectively). Only 13 are classified as freshmen. All these students will continue to receive Perkins funding until they graduate or through the year 2017 —whichever comes first—as long as they stay in the same academic program.
The students receiving Perkins Loans are among those presenting the highest need at DePaul. Nearly 60 percent of recipients (290 students) have an expected family contribution (or EFC) of $0, and 506 of the 507 students have an EFC of less than $9,000. This is one of the most challenging aspects of the program ending, according to Luff.
“Perkins is a critical source of money for some of our students who need it the most,” she explains. “As a university community, we must continue to work hard to ensure that everyone, regardless of economic status, continues to have access to a high-quality DePaul education.”
For more information about Perkins Loans at DePaul, contact Paula Luff.
Editor’s Note: This story was first published on November 13, 2015, after the U.S. Senate had allowed the Perkins Loan program to expire by declining to take up legislation to renew it. It has been updated to reflect the additional action taken by Congress in December 2015 to extend the program. DePaul’s response and strategy regarding Perkin’s remains the same as originally reported.