COHEAO and NACUBO Survey Reveals Perkins Loan Shortfalls

Of the institutions that responded to the survey, 28 percent indicated that they expected their institution to have a shortfall in their Perkins Loan fund on June 30, 2008, which would require their institution to make a loan to the fund. Another 18 percent were unsure if they would have a shortfall.

The institutions expecting a shortfall are primarily small, private institutions. 68 percent of the 76 institutions are private, four-year institutions, and more than 60 percent have a full-time equivalent student enrollment of 5,000 students or less.

The average projected shortfall anticipated at these institutions is $560,304, or a median of $200,000. Thirty-one percent of institutions anticipated that collections in the upcoming fiscal year would be sufficient to fully repay their institution’s loan to the fund. However, 37 percent indicated that they did not believe that collections would be sufficient.

Colleges and universities are finding themselves in this unprecedented situation due to several factors over the last few years, including the lack of new capital contributions by the federal government and large swings in the number of borrowers choosing to consolidate Perkins loans with their other federally guaranteed loans after leaving school.

This shortfall situation will require institutions to find institutional dollars to lend to their Perkins fund. Even at institutions that do not have shortfalls, students are likely to receive much less support from the Perkins Loan program next year.