The Perkins loan program, which currently provides loans to students and graduate students based on financial need, will cease to exist under the Bush administration's proposed budget for the next fiscal year. Federal appropriations for the Perkins loans were cut out of the 2005 budget, and the proposed budget for 2006 would bring an end to the program that began in 1958 as a part of the National Defense Education Act.
In 2004, the program was responsible for the distribution of $1.3 billion in loans to almost 700,000 students across the country that displayed financial need.
"I'm losing about $4,000 dollars a year. Guess I'll have to start dealing drugs again. Thank you Mr. President," Trak Lord '08 said.
The program currently allows students to borrow up to $20,000 over the course of their undergraduate careers and $6,000 a year as a graduate student. An individual can borrow no more than $40,000 from the program over his or her academic career. While the academic institutions are the creditors, the federal government provides a large portion of the funds for the schools to loan out.
While the proposed budget would increase the average amount of funds distributed in Pell Grants, another loan program, the proposed increase in Pell Grant money would be insignificant. This comes on the heels of a cut in Pell Grant funding earlier this year. Students would lose an average of $1,800 in loans from the Perkins program, but graduate students would be most affected by these cuts, as Pell Grants are generally not distributed to students who have already earned a bachelor's degree.
At first glance, these loans do not appear to be particularly attractive, especially as the interest rate of five percent applied to the loans is not outstandingly low. The loans, however, do have appealing aspects to them.
In some cases, loans granted under the Perkins program do not have to be repaid. Students who enter the teaching profession in certain areas with severe teacher shortages can have their entire loans forgiven, as can those who serve low-income families and the disabled. Graduates who serve in law enforcement, the military, or the Peace Corps also have decreased loan repayment responsibilities.
The unhappiness of many students with the proposed cuts was compounded by the knowledge that the cuts were prompted by the budget crisis created in part by the war in Iraq.
"Once again we see the Bush administration, because of its irresponsibility and negligence, taking away from those that do not have in this country," Leonardo Ospina '08 said.
