(April, 2009). As many of you are aware, the Obama Administration has proposed to create a new Perkins Loan Program. COHEAO would like to provide additional information and perspectives on the proposed changes to Perkins Loans and what the process is for any such changes.

The possibly of making changes to the Perkins Loan Program has only just begun. The decisions about what to do with the Perkins Loan Program – if anything – will be made later this year by the House Education and Labor Committee and the Senate Health, Education Labor and Pensions Committee, and then by the full House and Senate, with input from appropriators and others, including the Administration. Clearly they will take the Administration’s proposal into consideration, but it is certainly not a done deal that it will be adopted. The views of the higher education community, including the financial aid and presidential associations like ACE, AAU, NAICU, NASFAA, APLU, AACC and AASCU, will be very important. We have been working to try and make COHEAO’s concerns known to them, and we will continue to do so, as directed by you.

COHEAO representatives have also met with several Congressional offices and with Department of Education officials to ask questions about the Administration’s Perkins proposal and to let some of COHEAO’s concerns be known. These meetings will continue. As a result of communications between the higher education community in Washington, including COHEAO, and the Department, we expect a question and answer document to be posted sometime next week by the Department that will elaborate on the details about the Administration’s Perkins proposal. It is important to remember that these questions and answers are not regulations, or law, but are what the Administration is proposing to Congress for changes to the Higher Education Act.

Regarding the “budget” that you have all probably heard about being under consideration in Congress this week, there is nothing in this Congressional Budget Resolution that dictates what will happen to the Perkins Loan Program. In fact, Perkins is not mentioned in the resolution, which is simply an outline of Congress’s broad plans for funding federal programs in Fiscal Year 2010, which begins October 1, 2009. A positive for Perkins funding is that the budget plans call for more discretionary spending, which may include Perkins funding if Congress later decides to do that. The House and Senate will have to resolve differences between their versions of the resolution and vote on a final version. That final vote is expected when they return from their Easter Recess the week of April 20th.

Both versions of the resolution contain a “deficit neutral reserve fund” – really just a statement – suggesting that Congress make improvements to the financial aid programs. These reserve funds do not require any further action. The House version of the resolution has a “reconciliation instruction” that tells the House Education and Labor Committee to develop and approve legislation saving $1 billion in the programs under its jurisdiction over the next five years. The Senate version of the resolution does not have this provision. If the final resolution has a reconciliation instruction, it is likely to be used as a way to eliminate or modify the FFEL Program. Perkins changes may be part of the same legislation.

COHEAO’s Board of Directors has been reviewing the Administration’s proposal, as it currently stands, for Perkins Loans, and has developed some comments and proposals of its own. The COHEAO proposals may be modified depending on developments this year and further information. In general, COHEAO’s Board has taken the view that we support the concept of expanding the funding of Perkins and expanding its reach to include as many institutions as possible. Of great concern are the proposals to require that interest be paid during the in-school period, the elimination of all cancellation benefits except those that conform to Stafford benefits, and the transfer of all billing and collection of new loans to the Department of Education’s contractors. Attached please find a document that includes the Board’s views.

The House and Senate education committees will be considering the Administration’s proposals as well as other proposals during the coming months. COHEAO will be weighing in as directed by our membership and Board of Directors. We will keep you informed of developments, and we welcome your comments.

To view addition information and perspectives on the proposed changes to the Perkins Loan Program click here.

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