Loan program renewal fails: UW-W to lose $2 million in aid

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By Kimberly Wethal

Oct. 28,2015

 

Sen. Tammy Baldwin (D-Wisconsin) said she’s “not giving up this fight” when it comes to renewing a six-decade-old student loan program.

The Federal Perkins Program, a revolving scholarship fund that provided 1,193 UW-Whitewater students with $1.28 million in low-interest loans, Carol Miller, director of UW-W Financial Aid Department said, For the current academic year, failed to be re-authorized after its sunset day on Sept. 30.     

The program’s resolution needed unanimous approval in order to be reinstated for a one-year extension, but renewal was solely blocked by Sen. Lamar Alexander (R-Tennessee), chairman of the Senate Health, Education, Labor and Pensions committee.

Alexander opposes the program’s resolution, and instead looks to eliminate the program in order to consolidate all federal loans into one unsubsidized program.

“Our goal is to simplify the system, make it easier for students to apply for grants and loans…and the Perkins loan is not as effective a loan in meeting those goals as the other loans that we have,” Alexander said on the senate floor.

This move frustrated Baldwin, who said she understood how critical this program was to students in her state.

“I know the difference it makes and I know the frustration that my constituents have that Congress is not doing enough to address the debt burden that students face and to make higher education more affordable and more accessible,” she said. “And yet the fact that one senator could stand up and and reject a bipartisan and commonsense measure to make education more affordable and accessible is a perfect example of why the American people are so frustrated and upset with what’s happening in Washington and what’s not happening in Washington.”

The program’s extension was a bipartisan effort between Baldwin and senators Rob Portman (R-Ohio), Robert P. Casey (D-Pennsylvania) and Susan Collins (R-Maryland). Baldwin made a second attempt to save the program on Oct. 21 by speaking on the Senate floor in Washington, D.C. by asking for a unanimous consent request, but Sen. John McCain (R-Arizona) voted it down on behalf of the Republican leadership.

The House of Representatives unanimously approved the program’s resolution during the last week of September before Baldwin spoke on the Senate floor in order to gain support.

The Federal Perkins Loan Program has been around since 1958, allowing low-income students who might not be able to take out private loans to take out loans at an interest rate of 5 percent,  2.5 to 3 percent less than the national average from private loans. Baldwin said the program assists close to 20,000 Wisconsin college students, distributing around $41 million in aid.

UW System President Ray Cross sent a letter co-signed by 14 chancellors to Baldwin and other Wisconsin legislators, saying the program’s discontinuation leaves students “caught in the middle.”

“The path to social mobility and economic prosperity winds its way directly through our classrooms,” Cross said. “Unless we can accommodate the growing numbers of needy students in the education pipeline, the consequences for students, for higher education, and for our country’s economic and social future are enormous.” 

Baldwin has been holding roundtable sessions at college campuses around Wisconsin, most recently in Kenosha earlier in October, where she heard from leadership groups from UW-W, UW-Parkside, Carthage College and Gateway Technical College.

It’s the stories she hears from students at her roundtable discussions that she brings back to Capitol Hill.

“I’m fighting for students like Benjamin Wooten,” Baldwin said to the Senate on Sept. 29. “Wooten was a 2004 UW-Madison graduate and a small business owner from Genoa City in Wisconsin whose family fell on hard times while he was doing his higher education. I’m also fighting for students like Brittany McAdams. Brittany is a medical school student with a passion for pediatrics and helping the most vulnerable among us … you don’t have to look very far to find the significance and the impact of the Federal Perkins Loan Program, the significant impact it has on America’s students.”

Financial Foes

The end of this program will mean a “hardship” on many students, Miller said.

“If in fact, this loan program goes away, that’s a lot of money that we’re giving to students this year … that’s going to be $2 million plus that students don’t receive,” Miller said.

UW-W gives out loans based on need and finds ways to give students as much in other loans as possible, said Carol Miller, director of financial aid on campus. In-state students can receive  $1,000 in assistance, and out of state students are awarded $1,500 based on their need.

Students are given their maximum of subsidized and unsubsidized loans first, however, making Federal Perkins loans the last alternative to private loans.

Federal regulations prefer financial aid packages that give out the Federal Perkins loan first to students, but since UW-W has a limit to how much funding they can give out of the program in combination with other programs, the university prefers to have students take out what they’re eligible for before they receive the loan.

“This really helps a lot of our students bridge the gap between their financial need and the financial aid that they’re receiving,” Miller said. “If it’s not renewed, some of our students might not be able to get their bills paid.”

The loan program is a revolving fund, meaning that as graduated students who previously received assistance pay off their loans, their payments go right back into the fund for current students. The initial money came from the feds years ago, Miller said, but the program has been funded by students for years as they receive the initial money and pay it back; UW-W has not received federal funding for the program for the past several years.

“We are looking to have students pay back their Perkins loans so that other students can benefit,” Miller said.