Federal loan program expires raising college cost concerns

Published: Oct. 15, 2015 at 8:40 PM CDT|Updated: Dec. 25, 2015 at 12:19 AM CST
Email This Link
Share on Pinterest
Share on LinkedIn

MONTGOMERY, AL (WSFA) - As high school students prepare to apply for college one option to pay for their education no longer exists.

Just two weeks ago the federal government passed a last-minute measure keeping the government open, but in that rush, a decades old college loan program expired.

The Perkins Loan Program offered low-income students up to $5,500 for their college education.

The program makes up $1.2 billion of $150 billion in aid the  government gives out each year.

Since it's inception in 1958, the program has helped more than 30 million students at more than 1,500 colleges across the country. One of those schools is Auburn University at Montgomery, which says they'll definitely see an impact.

"At AUM, we award somewhere between 175 to 200 students each year funds from the Perkins loan program," says Anthony Richey, senior director of financial aid at AUM. "So initially, we're not going to be able to award new students that loan anymore since it has expired."

The House of Representatives did vote to re-authorize the program but Sen. Lamar Alexander (R-Tenn.), Chairman of the Senate Committee on Health, Education, Labor and Pensions, blocked a vote in the Senate.

Alexander released a statement explaining his decision:

"We're in the middle of the re-authorization of the Higher Education Act and that includes the Perkins Loan program. Through the last Higher Education Act in 2008, Congress agreed on a schedule to sunset the Perkins loan program. According to the CBO, reauthorizing the Perkins loan program for 10 years would cost about $5 billion.Students who currently have Perkins loans will continue to receive them. I am one of a bipartisan group of senators who have proposed that we replace the Perkins program with student loans that are simpler and have lower interest rates and more generous income-based repayment opportunities.”

For first-year students currently taking out a Perkins loan, that aid won't be available next year unless a replacement allows it. But until that replacement comes, students are left in limbo especially those who rely on financial aid.

A third of students who received the loans during the 2012-13 school year came from families that made less than $30,000 a year.

"There's still a possibility that congress could bring it back during the re-authorization of federal aid or they could try to bring it back when they create the new budget," Richey said. "However things are kind of grim as far as whether that will happen or not."

Students who were awarded Perkins Loans before June 30 are grandfathered in and can still receive funds as long as they meet certain criteria at their school.

Copyright 2015 WSFA 12 News. All rights reserved.