Senator Baldwin Highlights Importance of Perkins Loans at HELP Committee Hearing on Institutional Risk Sharing
Prepared by: Wes Huffman (whuffman@wpllc.net)
May 20, 2015
Today, Sen. Tammy Baldwin (D-WI) highlighted the Perkins Loan Program at a Senate HELP Committee hearing on institutional risk sharing in the federal student loan programs. Baldwin noticed the phrase “skin in the game” had been mentioned several times and noted this concept has been around since 1958 through Perkins Loans. She described Perkins’ risk sharing elements as follows:
“In this campus based loan program, participating schools share the risk by providing a 1/3 match for federal funding, and loans are made using funds repaid from previous borrowers, which encourages institutions to keep their default rates as low as possible.”
The Wisconsin Democrat also highlighted how the campus based nature of Perkins allows institutions to target loan funds to those who need them most. Baldwin then mentioned the importance of the program to her home state, where 15,000 students receive $28 million in Perkins funding, and noted the program is scheduled to expire on September 30, 2015. She asked the witnesses if they shared her concerns on the elimination of the program and if it could serve as a model for further implementation of risk-sharing concepts.
Jennifer Wang, who serves as policy director for the Young Invincibles advocacy organization, said she very much shared Baldwin’s concerns on the elimination of Perkins, particularly since it was such an important tool for college access. Dr. Douglas Webber, a professor at Temple University with expertise in education finance, agreed the program was important for preserving access. He also said he would increase some of the “bite” in terms of default rate penalties associated with the Perkins Loan program, but also concluded his remarks with the following statement: “But is it a viable method for implementing risk-sharing? Yes, I absolutely believe it is.”
COHEAO Executive Director Harrison Wadsworth was in attendance at today’s hearing and we will send a full summary later this week. However, given this exciting news, we wanted to share it with COHEAO members and Perkins Loan advocates immediately as your hard work is continuing to produce results.
To watch Sen. Baldwin’s comments live, please use this link and advance the video to the 1:48:25 mark. The video player can be a bit tricky at times, but the file will quickly advance and it is worth the effort to see these comments.
Thank you for your continued efforts to preserve and improve the Perkins Loan Program. Perkins Loan advocates must continue to press forward to ensure this program does not expire, but your efforts are already having a significant impact.
