A federal student loan program that has helped low-income students for decades will be discontinued after Congress did not pass a bill that would have extended it.
This is the last year that students will benefit from the Federal Perkins Loan Program. Although lawmakers from the U.S. House of Representatives had passed a bill allowing the program to stay in place for another year, the U.S. Senate was unable to come to a consensus.
The bill's co-sponsor, Rep. Louise Slaughter, released a statement saying the loan would be an investment in the future, as it offers aid to low-income students, comes with a low, capped interest rate, and was administered by colleges, writes Melissa Steinken for The Minnesota Daily.
"Students should be studying for their next exam, not worrying whether they can afford their next semester," she said in the press release. "The loss of Perkins Loans [will be] be an unrecoverable blow to the 500,000 students across the country who rely on them."
The loan, in place since the 1950s, offered undergraduates as much as $5,500 per year and graduate students up to $8,000 a year. Interest on Perkins Loans is fixed at 5%.
"Right now there is nothing to replace this program," said Thomas Schmidt, associate director of student account assistance and third-party billing at the University of Minnesota. "Students that relied on [the loan] will not have any other money from schools to replace it, and schools won't have money to give them to make up for loss of the loan."
While the loan will no longer be funded by the federal government, individual colleges will have the ability to make use of limited loans from the Perkins loan fund, which are available until 2016. The loan differs from other sources of federal aid in that the debt accrued can be cancelled.
The average loan amount given out to recipients is $2,000. Most of the time, the loan is offered to those who are most in need financially.
"Higher education can create a vital role in lifting people out of poverty and setting them on the pathway to success," Rep. John Kline, R-Minn., who chairs the House Committee on Education and the Workforce, said in a press release.
Meanwhile, US Senator Charles Schumer of New York said he would make an effort to include the loan in the next federal budget, adding that as college costs continue to rise, it is up to the federal government to do more to make college affordable, writes Ariel Zangla for The Daily Freeman.