Financial Aid Gap Looms With Perkins Loan Discontinuation

Boston College students who chose to finance their education through federal Perkins Loans this year, along with thousands of first-time Perkins Loan recipients across the country, have been left to suffer the consequences of the loan’s retirement.

The Office of Student Services has been advocating for the continuation of the Perkins Loan Program, which was retired on Sept. 30 after Congress failed to reinstate it.

First-time Perkins borrowers needed to provide all financial paperwork to the Office of Student Services and sign a Perkins promissory note by the Sept. 30 deadline in order to receive the Perkins funds that they were allotted in their financial aid awards this year before the program’s expiration.

Most first-time borrowers cannot sign their Perkins promissory note electronically—borrowers enter their information into a third-party system, which determines if they are able to sign online.

The third-party system evaluates a borrower’s credit history, amongst several other factors, in an attempt to authenticate them. A majority of first-time borrowers weren’t authenticated, and had to sign paper promissory notes. Because of this, many students struggled to turn all of their paperwork in on time.

Several students did not meet the deadline, Associate Director Kathleen Rosa said.


“More than half my tuition is covered by financial aid…There are students here that need loans.”

-Ariana Tramonti-Bonet, MCAS ’19


Freshmen and transfer students, specifically, will deal with the consequences of the program’s expiration since most first-time borrowers belong to these groups. There were 710 first-time borrowers this year, Rosa said.

Even students who received Perkins disbursements before the deadline are impacted by the loan’s retirement. Under the new guidelines, students who received their first Perkins disbursement this semester can receive additional disbursements next semester, but will not receive the loan in their financial aid packages next academic year.

Perkins Loans are distributed to students with extremely high financial need. If a low-income student cannot find alternative funds next year, they may be unable to pay next year’s tuition.

“More than half my tuition is covered by financial aid,” Ariana Tramonti-Bonet, MCAS ’19, said. “There are students here that need loans.”

Tramonti-Bonet, who received a Perkins Loan this year, will not receive the loan next year under the current stipulations.

“I was really close to not meeting the deadlines,” she said.

As a first-time borrower, Tramonti-Bonet was not familiar with the characteristically confusing process of applying for aid. She thought that she had filled out all of her loan paperwork online, but received an email shortly after she arrived at BC that said her Perkins Loan had not yet been distributed to her student account.

After Tramonti-Bonet received the email, she rushed to the Office of Student Services to sign her promissory note in person.
There are several reasons students may have missed the Sept. 30 deadline, Rosa said. First-time borrowers cannot sign their Perkins promissory note electronically—government regulations require that schools receive a hard copy of the promissory note for new borrowers, which makes it difficult for some students to turn all of their paperwork in on time.

“I haven’t had an electronic promissory note since 2007,” Rosa said.

Tramonti-Bonet was not aware that the Perkins Loan Program was set to potentially expire when she decided to come to BC.

If she comes up short in her financial aid package next year, she worries that she will be forced to take out more high-interest private loans.

“It’s kind of a big deal if my private loan has to increase,” she said.

Tramonti-Bonet hopes that BC will come to students’ aid in the aftermath of the loan’s retirement.

“I’m sort of expecting the school to compensate with the school grant … make up the difference so it’s not as noticeable,” Tramonti-Bonet said. “Not all public and private schools can do that with their endowments.”

Some BC students who have Perkins Loans will not be impacted by its retirement, however. Upperclassmen who have borrowed Perkins money from BC in the past will still be able to receive the loan under the condition that they do not change their major before graduating.

The BC Office of Student Services has been bracing itself for the repercussions of the program’s retirement, said Rosa, who has administered the loan for over 20 years.

Congress will decide whether to reauthorize the Higher Education Act this spring, and Perkins advocates hope that the loan program will be reintroduced in the act, Rosa said.

“We’ve weathered through these kinds of waves before,” she said. “At least three times since I’ve been here we’ve said, ‘It’s going to get terminated,’ and it hasn’t. I still have that ray of hope.”

Reinstating the loan program would cost $5 billion, and Senator Lamar Alexander of Tennessee—the Republican chairman of the Senate education committee who blocked the program’s revival—has said that the money would be better spent on grants.

He also thinks that it would be better to streamline federal loans. Instead of having subsidized Stafford Loans, unsubsidized Stafford Loans, and Perkins Loans, he wants to make one large unsubsidized loan.

Another reason Alexander does not want to see the program renewed is that the Perkins Loan currently has the highest interest rate of the undergraduate federal loans—but it is also the only fixed rate. When the loan was cancelled last week, Rosa said her staff was “concerned, as they should be.”

The Office of Student Services has not been given any information about what steps to take now that the loan has been retired.

“There is no plan in place for Washington to call these loans back,” she said. “This is a big endeavor.”

The Perkins Loan is unique in that for several years it has been self-sufficient.

“It’s a completely revolving fund,” Rosa said.

The program has been funded entirely by money that has been repaid to schools from former borrowers. Additionally, all Perkins Loans are eligible for cancellation if their recipients work in one of several public service occupations, such as teacher, law enforcement official, nurse, or civil servant.

Since the Perkins Loan requires schools to provide 25 percent of the money for the loan to be disbursed, the federal government is supposed to reimburse schools if a loan is forgiven.

“We cancel a lot of debt,” Rosa said. “We’re supposed to be replenished for that debt, and we haven’t had money given to us since 2004.”

Correction: This article has been updated to clarify that new borrowers need to be authenticated by a third-party in order to qualify to sign an electronic promissory note.

Featured Image by Tatiana Petrovick / Heights Staff