TO: COHEAO Members
FR: Harrison Wadsworth
Andrew Stringer
Joan Coyle
Re: Senate Higher Education Act Reauthorization
The Senate Health, Education, Labor and Pensions (HELP) Committee marked up S. 1614, the Higher Education Amendments of 2005. The bill reauthorizes the Higher Education Act of 1965 and includes a reauthorization of the Perkins Loan Program. The bill was successfully reported out of committee in a 20-0 vote.
The bill is expected to be rolled into a budget reconciliation bill that will also include pension savings and savings from other programs, including Medicaid. House and Senate leadership have stated that they will delay budget reconciliation efforts until later this year in an effort to deal with the effects of hurricane Katrina.
The following is a summary of some of the changes of interest to those involved Perkins Loan Program in S. 1614:
- The bill reauthorizes the Perkins Loan program through 2010.
- The bill adds loan forgiveness for early childhood educators, instructors at tribal colleges or universities, and librarians with a master’s degree in library science serving in Title I schools or libraries.
- Loan deferments are extended for people serving in the military (also extended in FFELP and Direct Loans).
- Requests for forbearance are no longer required to be in writing. The three-year limit is retained.
- The allocation formulas for campus-based programs – Perkins, SEOG and Work study -- are not changed.
- Stafford loan limits are increased like in the House, and the Stafford loan fixed rate of 6.8% is kept in the law to take effect next July.
- PLUS loans are made available to graduate students. The PLUS fixed rate is raised to 8.5%.
- Consolidation loan lenders are specifically required to inform Perkins Loan borrowers of the loan forgiveness and other aspects of the Perkins Loan Program before consolidating their Perkins Loans. (see below)
- There is a technical change regarding Perkins Loans in default as they related to eligibility for other Title IV financial aid.
Also of note are two provisions in the House HEA reauthorization bill, H.R. 609, that are not in the Senate bill:
-
Perkins Loan annual borrowing limits are increased in H.R. 609 to $5,500 for undergraduates and to $8,000 for graduate students.
- H.R. 609 increases the Books and Supplies allowance increases to $600.
COHEAO will continue to provide updates throughout the reauthorization and reconciliation process.
Below is the text of the provision in S. 1614 requiring that lenders disclose specific Perkins Loan information to Consolidation Loan borrowers:
…the lender will disclose, in a clear and conspicuous manner, to borrowers who consolidate loans made under part E of this title--
``(i) that once the borrower adds the borrower's Federal Perkins Loan to a Federal Consolidation Loan, the borrower will lose all interest-free periods that would have been available, such as those periods when no interest accrues on the Federal Perkins Loan while the borrower is enrolled in school at least half-time, during the grace period, and during periods when the borrower's student loan repayments are deferred;
``(ii) that the borrower will no longer be eligible for loan forgiveness of Federal Perkins Loans under any provision of section 465; and
``(iii) the occupations described in section 465(a)(2), individually and in detail, for which the borrower will lose eligibility for Federal Perkins Loan forgiveness; and''.
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