U.S. Rep. John Spratt (D-SC) today introduced legislation to extend the life of the Perkins Loan program, giving 500,000 low-income students greater access to college each year and providing jobs to thousands who administer and service the loans nationwide.
"Education is the engine of job creation and economic growth," said Spratt. "By helping students attend college who otherwise might not be able to afford it, we are giving them the opportunity to succeed in today's economy.
"In my district, two companies employ almost 300 people servicing Perkins loans, and the results speak for themselves: it's a successful student aid program with a low default rate," Spratt said.
The bipartisan Perkins Loan Extension Act was introduced in the U.S. House of Representatives by Spratt and cosponsored by Education and Labor Committee Chairman George Miller (D-CA), Rep. Tim Bishop (D-NY) and Rep. Cathy McMorris Rodgers (R-WA).
Bob Perrin, President of Williams & Fudge, Inc., a Perkins loan servicer in Rock Hill, South Carolina, said, "Williams & Fudge, Inc. is very thankful for Congressman Spratt's leadership, dedication, commitment, and support to preserve the Federal Perkins Student Loan Program. In a community that is experiencing double-digit unemployment, 240 professional jobs at our company are dependent upon the continuation of the program. These same 240 employees who are proud of the role they play in providing future opportunities for students also dine and shop locally, thus adding to the economy."
Under current law, colleges will begin repaying prior federal funding to the Treasury in October 2012 instead of continuing to make new loans with the funds, a change that would spell an end to the program. The recall date was pushed back a number of times in past legislation, most recently in the 2007 College Cost Reduction and Access Act.
"Allowing the program to end in 2012 will jeopardize college access for low-income students," said Spratt. "It will also eliminate jobs for thousands of people who administer and service the loans."
Spratt's bill changes the repayment date to October 2013, extending the Perkins loan program to allow colleges more time to plan how to continue providing assistance to students who are eligible for Perkins loans.
"Unlike some federal aid programs, there's a human touch to Perkins loans, where colleges choose the students who apply and then either work with the students or hire companies to service the loans," Spratt said.
Lori Hartung, Regional Sales Manager for Todd, Bremer & Lawson, Inc., a Perkins loan servicer with about 40 employees in the 5th District, said, "It is great news that Congressman Spratt is taking steps to continue the Federal Perkins loan program that helps make college possible for many people. His leadership in supporting this important loan program will make a difference for people in our community and students across the country."
Perkins loans are low-interest (5 percent interest) loans that go to about 500,000 low-income college students at some 1,700 college campuses each year. Students can have their Perkins loans cancelled if they undertake certain public service jobs for a specified length of time, thus reducing their total debt and making it easier to choose to pursue public service.
The program is financed by past federal capital contributions, college matching funds, and student repayments of past loans that are recirculated in a college's revolving fund. The President's budget included a comprehensive change to expand and extend the program, but Congress did not include the proposal when it approved changes to student aid programs earlier this year.