Loans aren’t our favorite type of financial aid—in fact, those of us who have loans often complain about making monthly payments after graduation. Sometimes, we are forced to forgo certain opportunities like joining the Peace Corps or going on to graduate school because the monetary input/output becomes too nerve wracking as we think “Okay, if I live off of peanut butter and jelly sandwiches, share a room with two other people and ride my bike everywhere that leaves me with…. Still not enough money to pay my loans!”
Even though loans don’t get high marks from students, it is important to distinguish between the different types of loans. I might not like the idea that I will be graduating with $30,000 in debt, but this is federally subsidized debt. No interest accrued while I was in school, my repayment terms are pretty merciful and some of my loans will even be cancelled for teaching in a low-income school with Teach for America. Some of my friends on the other hand, are burdened with private loan debt. This often means that they are graduating with two to three times my debt, have higher interest rates and extremely rigid repayment terms with no cancellation terms. The best loans are my Perkins loans because the interest rate is capped at a low 5 percent, and if I teach for five years in low-income schools, I could have 100 percent of my Perkins loans forgiven.
I am appalled that President George W. Bush has recently proposed to end federal funding of Perkins loans, effectively killing the program. When The Chronicle reported on this story, Director of Financial Aid Jim Belvin admitted that Duke would probably have to turn to another lender and students would pay higher interest rates. This means that companies like Citigroup will probably come in and make a profit off poor college students while those students lose out on the forgiving interest rate and terms of Perkins loans, as well as their incentive to serve the public good. While it seems that no one at Duke is applauding this decision, where is the outcry? Either Mr. Belvin gave his quote with a certain chutzpah that the written word tends to miss, or we are just rolling over and letting the federal government gut the best loan program in the history of American higher education.
Perkins loans are available only for low-income students—it is for this reason that this program is limited in scope and yet has a deep impact for struggling students. The White House has tried to make us believe that because Perkins loans are given to a relatively small percentage of students, this program is therefore unimportant. Of the $30,000 in debt I will have upon graduation, about $10,000 of this is in Perkins loans. That’s $10,000 that I could have cancelled if I choose to teach for at least five years in a low-income school. Perkins may be a small program, but it is a lifesaver for low-income students who have an especially difficult time dealing with loan payments after graduation. Low-income students are entitled to up to $4,000 each year in Perkins loans, in addition to subsidized Stafford loans and any other aid that is available to them. Does the White House really think this program is of no consequence?
In return for taking away our Perkins loans, Bush wants to increase Pell grant maximums by $100 per year for five years, bringing the grand total to $4,550 per year. While it is important to increase Pell grant funding because this funding is essential to low-income students and their families, this increase in no way makes up for losing Perkins loans. In my own case, I would end up paying higher interest rates and losing loan forgiveness for teaching in a low-income school. In return for losing over $10,000 (including the higher interest rates I would end up paying), I would get an extra $500. I’m not especially good at math, but this just doesn’t make much sense to me. In fact, the more I think about it, this almost seems like some kind of sick joke on poor students. Please, if anyone understands this math or why this is a good policy move, please let me know. On this issue I really can’t see “the other side”: Bush is taking money away from the students who need it the most and giving us money for an extra book each year. This makes about as much sense as taking funding away from the AmeriCorps program, another great policy move from this White House. Of all the issues our country is divided on, shouldn’t we at least agree that a program that helps poor students get an education while encouraging them to give back to society is a wonderful idea?
As much as I am worried about students losing the merciful interest rates of Perkins loans in exchange for higher interest rates from for-profit enterprises, I think the loss of the forgiveness terms under the Perkins program is the most lamentable. While everyone should be encouraged to give back to their community, low-income students often face difficulties doing so because giving back doesn’t always “give back” monetarily. This is especially worrisome because it is low-income college students who are often the best suited for community work—they come from the same communities as the people they serve. Cutting off funding to a program that facilitates this relationship between low-income students and their communities is completely indefensible.
Since Perkins loans only affect a small percentage of students, it’s difficult to tell how many institutions will take up the cause and lobby the White House to recant its decision to cut funding for this exemplary program. It is my hope however, that at least here at Duke University we will fight the good fight for the only “good” loans we’ve ever had.
Bridget Newman is a Trinity senior. Her column appears every other Thursday.
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