Northwestern faces Perkins Loan roadblock as it works to improve financial aid

Current+freshmen+and+future+NU+students+will+lose+funding+from+Perkins+loans+unless+Congress+restores+the+federal+financial+aid+program+next+month.+Last+year%2C+23+percent+of+federal+financial+aid+given+by+NU+came+from+the+Perkins+Loan+Program.

Daily file photo by Jeffrey Wang

Current freshmen and future NU students will lose funding from Perkins loans unless Congress restores the federal financial aid program next month. Last year, 23 percent of federal financial aid given by NU came from the Perkins Loan Program.

Darby Hopper, Reporter

For this year’s freshman class and future students, the Federal Perkins Loan Program may not be available if the U.S. Congress does not restore the financial aid program next month.

Oct. 1 marked the expiration of the Perkins program, which has aimed to offer low-interest payment plans for students with financial need for nearly 60 years since its founding in 1958. Congress could potentially renew the program in mid-December.

Northwestern is one of approximately 1,700 U.S. universities that offers Perkins loans to students, with 26 percent of current undergraduates receiving a Perkins loan.

Students who already received the award in the 2014-2015 school year or earlier will have their loan package “grandfathered in” — meaning they will continue to receive the aid whether Perkins continues or not — either until they graduate or until five years time is up. Future classes, including current freshmen, are not eligible to be “grandfathered” into the program.

Last year, 23 percent of the $10.6 million in federal need-based student loans NU gave to undergraduates was from the Perkins program. Roughly 20 percent of graduate and professional students who had loan packages received Perkins funding.

The loss of the Perkins loan program will not reduce the amount of aid the University can provide students, said Carolyn Lindley, NU’s director of financial aid.

Lindley said her office is working with the Office of Student Loans to establish a campus loan program similar to the Perkins program through different forms of funding such as a donor-established endowed loan program. Associate Provost for Enrollment Michael Mills said a group of University administrators met Monday to discuss this program and other potential plans should the Perkins loan remain defunct.

“None of the details have been ironed out yet about interest rates, repayment terms, deferment options, all that stuff,” Mills said. “We’re modeling it all, but in the meantime, we’re just optimistic that the feds will bring back the Perkins and we won’t have to do any of it.”

Lindley said for NU, the financial aid office has guidelines but not a specific formula to determine who receives Perkins loans — a model used at universities across the country.

This standard is the result of what many experts refer to as a loophole in the original Perkins legislation. Because Congress did not define what it meant for a student to be in “significant financial need” in its legislation, schools used it to fill gaps in their financial aid packages, said Mark Kantrowitz, a financial aid expert and the former publisher of websites such as finaid.org.

“You have some colleges that are giving out Perkins loan money only to Pell Grant recipients, while other colleges are giving them to much wealthier students while some Pell Grant recipients don’t get any,” Kantrowitz said. “The idea that it would be distributed according to financial need, in practice, doesn’t exist.”

Although the loss of the Perkins program is a new issue for the University, the debate surrounding NU’s socioeconomic diversity and accessibility compared to its peer institutions is not.

Mills said near the start of University President Morton Schapiro’s tenure, NU was second to last in its peer group, the Consortium on Financing Higher Education, in terms of percentage of students with Pell Grants at around 9 percent. Pell Grants are a common measure of socioeconomic diversity in higher education, most often given to students who have annual family incomes under $20,000.

U.S. News and World Report ranked its top 25 schools on socioeconomic diversity based on the Pell Grant model with 2013-14 Department of Education data. University of California, Los Angeles topped the list with 39 percent of its undergraduates receiving Pell Grants and Washington University in St. Louis capped the lower end of the scale at 7 percent. NU fell somewhere in the middle, with 15 percent of students receiving the grant.

“Everybody else has grown, but the rate of growth for us has been ahead a lot of our peers, so we’re catching up,” Mills said.

However, ProPublica released a report in September showing NU falls behind its peer institutions in average cost of attendance for low-income students. At NU, the price for these students is $15,841. Five of the top 10 schools, which all have average costs of attendance below $8,000 for low-income families, have smaller endowments than NU.

“We first became aware of the deficit gap when some nonprofits started publishing, calculating, data points around the time Morty came,” Mills said. “That kind of focused our attention on it, and ever since then, we’ve been trying to whittle away, to make it more competitive. … The deficit is going to start to shrink.”

Mills said this year’s freshman class is the first in NU’s history in which all Pell recipients have aid packages with no loans.

The Perkins program — part of the Higher Education Act of 1965 — first expired on Sept. 30, 2014, but was extended for a year under the General Education Provisions Act. The House unanimously approved another one-year extension of the Perkins loan in the Higher Education Expansion Act of 2015 on Sept. 28, but the Senate, led by Sen. Lamar Alexander (R-Tenn.), blocked the vote.

Congress could renew the program when it sets a new federal budget in December. A bipartisan group of 54 senators signed an Oct. 29 letter urging Senate leadership to pass the Higher Education Extension Act until new methods of federal student assistance are decided.

At the University level, Mills said to increase NU’s socioeconomic diversity, Schapiro has set a goal of having Pell recipients make up 20 percent of the freshman class by 2020.

“It’s a very ambitious goal,” Mills said, “but we’re doing our best to try to reach it.”

Amanda Walsh, president of NU’s Quest Scholars Network, said when she first arrived on campus, she felt as if there was no work being done to help low-income and first-generation students. Through student activism and the work of the Quest Scholars Network, she said, that has completely changed.

“The University has made some incredible strides in making sure low-income and first-generation students really feel comfortable and accepted on this campus,” the Communication senior said. “Unfortunately, we are not all the way there yet, and I think it’s going to take a lot of time to get there.”

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Twitter: @darby_hopper

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