Perkins Loan Update from COHEAO - Take action now!

Congress continues to work on proposals to change the Perkins Loan Program dramatically. As we have noted in the past, the Congress is responsible for changing the law on how Perkins operates. Congressional staff in both the House and Senate are working on proposals, and this remains a priority of Secretary of Education Duncan and of President Obama. The House Education and Labor Committee is likely to consider legislation changing Perkins during July. COHEAO has submitted testimony with our proposals for modifying the Perkins Loan Program to the Committee. That testimony and a set of talking points are at www.coheao.org. Some updated and modified proposals are being prepared now and will be submitted soon to the House and Senate.

As Congress begins to write reconciliation legislation, the COHEAO Board of Directors has been working to develop a set of priorities for the Perkins Loan program. The Board has decided on major priorities for the program: 1) retaining as much of the in-school interest benefit as possible; 2) continuing school control over both the distribution of loan funds and in working directly with student borrowers in servicing the loans; 3) making sure existing Perkins institutions are able to continue lending at current levels and that their rights to their institutional funds are preserved.

One of the most student-friendly features of the Perkins Loan Program is the in-school interest subsidy. COHEAO would like to continue to explore the possibility of maintaining as much as possible of the in-school subsidy, even including allowing institutions to provide the funding for such a subsidy through some form of an institutional match.

In the expanded Perkins Loan Program as proposed by President Obama, servicing arrangements would be based on factors such as cost, experience, and customer service. COHEAO believes that schools that wish to service their Perkins portfolio in the same manner as the current Program should be allowed to do so. This will maintain the competitive servicing model and functionalities that exist at the campus level for the existing and expanded Perkins Loan Program. The benefits derived from the interpersonal relationships between the servicers, institutions, and the borrower are a unique attribute of the Perkins Loan Program resulting in minimal cost and great potential benefit to the Federal Government.

COHEAO urges you to call or write your Members of Congress and let them know your views. It is especially important for those of you who have members of the House of Representatives Education and Labor Committee in your state to contact them right away. That Committee is in the process of writing legislation now. To see how to write your member of Congress and for some sample letters, go to www.coheao.org.