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Thread: Perkins Loan Program Ended?

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    Moderator Optimist's Avatar
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    Default Perkins Loan Program Ended?

    .....colleges lost the authority to make new federal Perkins loans. Students currently enrolled in college who received a Perkins loan before June 30 will be still be able to take out another for up to five years.. About 540,000 students received Perkins loans, averaging about $2,172, for the 2013-14 academic year, according the U.S. Department of Education.
    Perkins was created in 1958 to provide low-interest loans to needy students through a cost-sharing agreement between the federal government and colleges. Congress has not contributed money to the program for about a decade. Instead, the 1,500 schools that offer Perkins loans rely on their own contributions and repayment from prior recipients to fund the loans.
    The loans carry a 5 percent interest rate and are subsidized, meaning the government pays the interest while the student is in school. But with interest rates on federal Stafford loans below 5 percent for the last few years, the rate on Perkins loans is not as favorable as it used to be.


    “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,” Sen. Alexander. https://www.washingtonpost.com/news/...l-aid-program/
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    Default Re: Perkins Loan Program Ended?

    This thread runs the very real risk of violating the ban on politics but since it was opened by a moderator, I will comment. That said, Perkins loans were made by universities and colleges. As Optimist pointed out, the interest rate was guaranteed by the federal government. Further, the federal government guaranteed the principal of the loans as well. In short, these loans were a no risk proposition for the colleges and universities with endowments large enough to make the loans. They got a sure 5% return at no risk. For colleges with small endowments, these loans were simply not possible. So it was a subsidy for the wealthy colleges and universities from the U.S. Treasury.

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