As a federally funded student-aid program, the Perkins loan can trace its origin to an Oct. 4, 1957, Soviet satellite launch. Sputnik I gave the U.S.S.R. a technological edge in the Cold War, spurring concern about American scientific expertise. Congress and President Dwight D. Eisenhower chose to address the nation's economic competitiveness and shortcomings in science, mathematics and technology through educational support and reform. Eleven months after Sputnik I, the National Defense Education Act became law on Sept. 2, 1958.
NDEA Loans
Of the 10 titles in the NDEA, Title II established the National Defense Student Loan program, the first federally supported low-interest, long-term loans for qualified college students. These loans, funded by the U.S. Treasury and provided directly to schools, initially gave priority to science, math, engineering and foreign language majors, according to the Institute for Defense Analyses. Students could borrow $1,000 annually with a maximum of $5,000. Repayment in 10 annual installments began one year after graduation or leaving school. The Institute for Defense Analyses reports that "1,188 institutions had loaned $9.5 million to 24,831 students" in 1959.
Name Change
Begun as an eight-year initiative, the Title II NDSL program gave financially strapped students access to higher education by making loans acceptable components of financial aid packages. Congress reauthorized this "campus-based program" in 1965 and1970 and changed its name to the National Direct Student Loan Program with re-authorization legislation in 1972, according to Chess Consulting. Interest remained unchanged from the original program: zero while enrolled; 3 percent after leaving school. In his testimony before the U.S. House of Representatives Subcommittee on Post-secondary Education, Alfred B. Fitt of the Congressional Budget Office noted that 400 institutions loaned nearly $5 billion to 874,000 student borrowers in 1979.
Perkins Loans
In 1986, Congress gave the direct student loan program its third and present name: Perkins Loan Program. The name change honored Kentucky Congressman Carl D. Perkins, who championed legislation for student aid. According to the U.S. Department of Education, the program structure in 2011 mirrors the original Title II NDSL: DOE makes money available to schools, who lend to students based on financial need. Students have 10 years to repay the school after they leave. For the 2011-2012 academic year, undergraduates can borrow up to $5,500; graduate students have an $8,000 limit. The Student Aid Alliance website notes nearly $29 billion in student loans have been issued since the program's inception in 1958.
Application
Students must submit the Free Application for Federal Student Aid (see Resources) application to be considered for all federally funded or subsidized financial aid, including Perkins loans. The DOE recommends early submission as each participating school receives a set dollar amount that could result in an eligible student not receiving a loan.
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