Campus-Based Student Financial Aid Programs Under the Higher Education Act

Changes from February 11, 2005 to April 21, 2005

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Order Code RL31618

CRS Report for Congress
Received through the CRS Web

Campus-Based Student Financial Aid Programs
Under the Higher Education Act

Updated February 11April 21, 2005

David P. Smole
Analyst in Social Legislation
Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

 Campus-Based Student Financial Aid Programs
Under the Higher Education Act
Summary
Three Higher Education Act (HEA) programs — The Federal Supplemental
Educational Opportunity Grant (FSEOG) program, Federal Work-Study (FWS)
program, and Federal Perkins Loan program — collectively are referred to as the
campus-based programs. Funding authorization for the campus-based and other
HEA programs was extended through FY2005 under the Higher Education Extension
Act of 2004 (P.L. 108-366). Reauthorization of the HEA, including the campusbased programs, may be considered by the 109th Congress.
Under the campus-based programs, federal funding is provided to institutions
of higher education for the provision of need-based financial aid to students.
Institutions participating in the programs are required to provide a match of
approximately one-third of the federal funds they receive. The campus-based
programs are unique among the need-based federal student aid programs in that the
mix and amount of aid awarded to students is determined by each institution’s
financial aid administrator according to institution-specific award criteria (which
must be consistent with federal program requirements), rather than according to nondiscretionary award criteria, such as that applicable for Pell Grants and subsidized
Stafford Loans.
Each program provides students with a distinct type of aid. The FSEOG
program provides grant aid only to undergraduate students. The FWS program
provides undergraduate, graduate, and professional students the opportunity for paid
employment in a field related to their course of study or in community service. The
Perkins Loan program provides low-interest loans with favorable terms and
conditions to undergraduate, graduate, and professional students.
Funding is provided to institutions separately for each program according to
formulas that take into account both the allocation institutions received in years past
(their base guarantee) and their proportionate share of eligible students’ need that is
in excess of their base guarantee (their fair share increase). From these funds,
institutions’ financial aid administrators award aid to eligible students having
financial need.
The programs are among the oldest of the federal postsecondary aid programs;
however, they now operate amidst a host of other aid programs and tax benefits,
some of which are not need-based. At present, a relatively small proportion of all
students receive campus-based financial aid. Over the past decade, the number of
institutions participating in the programs has also declined.
Among the issues likely to be considered during reauthorization are whether the
campus-based programs provide types of aid to students that are not or cannot be
provided via other postsecondary aid programs, and whether the current formulas for
allocating funds to institutions for the operation of these programs are optimal.
Provisions specific to each program, such as requirements for community service
under FWS and terms and conditions of Perkins Loans also may be considered.

 Contents
Current Program Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Federal Supplemental Educational Opportunity Grants . . . . . . . . . . . . . . . . 2
Allocation of Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Federal Work-Study Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FWS Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FWS Community Service Employment . . . . . . . . . . . . . . . . . . . . . . . . . 6
Job Location and Development Programs . . . . . . . . . . . . . . . . . . . . . . . 7
Federal and Non-Federal Shares of Compensation . . . . . . . . . . . . . . . . 7
Work Colleges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Allocation of Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Federal Perkins Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Award Procedures and Terms of Perkins Loans . . . . . . . . . . . . . . . . . 10
Deferment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Forbearance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Loan Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Allocation of Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Transfer of Funds Between Campus-Based Programs . . . . . . . . . . . . . . . . . 15
Administrative Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Funding and Program Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Funding for the Campus-Based Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Institutional Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Students Served and Average Aid Amounts . . . . . . . . . . . . . . . . . . . . . . . . 19
FSEOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
FWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Perkins Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Distribution of Campus-Based Student Aid . . . . . . . . . . . . . . . . . . . . . . . . 24
Potential Issues for Reauthorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3324
Continuation of the Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Campus-Based Funding Formulas . . . . . . .24
Procedures for Allocating Funds to Institutions . . . . . . . . . . . . . . . . . . . . . . . . . 3425
Program-Specific Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3627
FSEOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3627
FWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3728
Perkins Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

 28

List of Figures
Figure 1. Institutions Participating in the Campus-Based Programs:
Award Years 1984-1985 through 2004-2005 . . . . . . . . . . . . . . . . . . . . . . . 19
Figure 2. FSEOG: Number of Students Receiving Awards and
Average Award Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Figure 3. FWS: Number of Students Receive Awards and Average Award
Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Figure 4. Perkins Loans: Number of Students Receiving Awards
and  and
Average Award Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

 23
Figure 5. Institutions Receiving Campus-Based Program Allotments
and  and
Those with Adjusted Base Guarantees Greater Than Their
 Fair Share: 
Award Year 2004-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36. . . . . . . . . 27

List of Tables
Table 1. FWS Requirements for Federal Share of Compensation . . . . . . . . . . . . 8
Table 2. Perkins Loan Cancellation Rates by Type of Service . . . . . . . . . . . . . . 13
Table 3. Administrative Cost Allowances for the Campus-Based Programs:
Award Year 2002-2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 4. Campus-Based Program Funding: FY1999-2005 .2006 . . . . . . . . . . . . . . . . 17
Table 5. Aid Available to Students Under Campus-Based Programs . . . . . . . . . 18
Table 6. Number and Percent of Institutions Meeting FWS Community
Service (CS) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table 7. Perkins &and FFEL/DL Cohort Default Rates: 1996-2003 . . . . . . . . . . 231996-2003 . . . . . . . . . . . . . 23
Table 8. Percentage of Students Receiving Aid and Average Amount
of Aid Received According to Type of Aid, by Income and
Dependency Status: 1999-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Table 9. Cross-Section of Percent of Students Receiving Aid and
Amount of Aid Received According to Type of Aid, by Program:
1999-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table 10. Percentage of Students Receiving Aid and Average
Amount of Aid Received According to Type of Aid, by Institution
Type and Attendance Pattern: 1999-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 31

 Campus-Based Student Financial Aid
Programs Under the Higher Education Act
Three postsecondary student financial aid programs authorized under the Higher
Education Act of 1965, as amended (HEA) — the Federal Supplemental Educational
Opportunity Grant (FSEOG) program, the Federal Work-Study (FWS) program, and
the Federal Perkins Loan program — collectively are referred to as the campus-based
programs. The campus-based programs are unique among the need-based federal
student aid programs in that federal funds are awarded to institutions according to
formulas that take into account past institutional awards and the aggregate financial
need of students attending the institutions. The mix and amount of aid students
receive is determined by each institution’s financial aid administrator according to
institution-specific award criteria, rather than according to non-discretionary award
criteria, such as that applicable for Pell Grants and subsidized Stafford Loans.1
The campus-based programs’ current authorization is provided last were amended under the Higher
Education  Education
Amendments of 1998 (P.L. 105-244) which reauthorized the programs that
 are part 
of the HEA. While funding authorization for these programs expired at the
 end of 
FY2003, the General Education Provisions Act (GEPA) provided for an
automatic  automatic
one-year extension through FY2004. Funding authorization was further
extended  extended
through FY2005 under the Higher Education Extension Act of 2004 (P.L.
 108-366). 
Reauthorization of the HEA, including the campus-based programs, may
be  be
considered during the 109th Congress.2
This report begins by providing a brief description of each of the campus-based
programs, including the terms under which financial aid is awarded to students and
the procedures under which federal funds are allocated to institutions for that
purpose.3 It then provides historical information on federal funds appropriated for
each of the programs and an analysis of the number and types of students served.
The report concludes with a discussion of topics that might be of issue as the 109th
Congress considers reauthorization of the HEA.

1

Institutions are required to establish written procedures for selecting recipients of campusbased financial aid. These selection procedures must meet the requirements of each
campus-based program, and must be kept on file at each institution. Consistent with the
availability of funds, institutions must make campus-based aid reasonably available to all
eligible students demonstrating financial need.

2

For further information on reauthorization of the HEA, see CRS Issue Brief IB10097, The
Higher Education Act: Reauthorization Status and Issues, by James B. StedmanAdam Stoll.
3

This report draws, in part, on earlier research by CRS specialist Deborah A. Santiago.

 CRS-2

Current Program Descriptions
This part of the report provides a description of each of the three HEA campusbased financial aid programs — the FSEOG program, the FWS program, and the
Federal Perkins Loan program. Program descriptions explain the purpose of each
program and the terms under which aid is provided to students. They also include
ana brief explanation of how federal funds are allocated to institutions for the purpose of

of providing aid to students.

Federal Supplemental Educational Opportunity Grants
The FSEOG program authorizes the Secretary to grant funds to institutions of
higher education for the purpose of providing financial assistance to undergraduate
students with exceptional financial need to aid them in obtaining the benefits of
postsecondary education. The FSEOG program is authorized by Title IV, Part A,
Subpart 3 of the HEA. It first was incorporated into the HEA under the Education
Amendments of 1972 (P.L. 92-318). Prior to authorization of the FSEOG program,
Education Opportunity Grants, authorized under the HEA of 1965 (P.L. 89-329),
served a similar purpose.
From the funds allotted to them by the Secretary, institutions award FSEOGs to
eligible students as part of their financial aid packages. Institutions are required to
award FSEOGs first to students with exceptional financial need, according to the
HEA need analysis provisions,4 with priority going to students receiving Pell Grants.
Institutions may establish categories of students for purposes of packaging FSEOG
awards. For example, “categories may be based on class standing, enrollment status,
program, date of application, or a combination of factors.”5 Categorization of awards
may not be used to arbitrarily deny FSEOG aid to students, for example by
establishing a policy of awarding aid on a first-come, first-served basis.
FSEOGs consist of a federal share, not to exceed 75% (except if the Secretary
determines that a larger share is necessary to further the purpose of the program), and
a non-federal share of at least 25%. The non-federal share is required to be funded
through the institution’s resources, such as institutional grants and scholarships,
tuition or fee waivers, state scholarships, and foundation or other charitable
organization funds. ED has determined that all state scholarships and grants can be
counted toward meeting the nonfederal share, except for funds provided under the

4

Per HEA Title IV, Subpart F — Need Analysis, a student’s financial need is calculated as
the cost of attendance, minus the expected family contribution (EFC) — the amount that a
student’s family is expected to contribute toward the student’s education, and minus the
estimated financial assistance not received under HEA Title IV (this includes scholarships,
grants, loans, veterans’ education benefits (Section 480(c)), national service educational
awards, and post-service benefits under Title I of the National and Community Service Act
of 1990.
5

U.S. Department of Education, Federal Student Aid Handbook, 2004-2005, vol. 3 —
Calculating Awards & Packaging, pp. 3-84 through 3-85. (Hereafter cited as ED, FSA
Handbook.)

 CRS-3
Leveraging Educational Assistance Partnership (LEAP) and the Special Leveraging
Educational Assistance Partnership (SLEAP) programs.6
Unlike the other two campus-based programs, students are eligible to receive
FSEOGs only during the period required to complete a first undergraduate
baccalaureate course of study. The maximum FSEOG award amount per academic
year is the lesser of the student’s financial need or $4,000. In the case of a student
studying abroad, and if the cost of studying abroad exceeds the cost of studying at the
student’s home institution, the FSEOG award may be increased to a maximum of
$4,400. The minimum value of an FSEOG award is $100 per year. For students
enrolled for less than a full academic year, the value of FSEOG awards are to be
proportionately reduced. Institutions are required to award a “reasonable proportion”
of FSEOG aid to independent students7 and to those who are enrolled less than fulltime if the institution’s allocation of FSEOG funds was based in part on the financial
need of such students. (Students enrolled less than half-time are eligible for aid
under each of the campus-based programs)..) Students do not repay FSEOGs.
Allocation of Funds to Institutions. FSEOG funds are allocated to
institutions of higher education according to formulasprocedures prescribed in the statute.
authorizing
statute.8 Institutions first are allocated funds in proportion to the amount they 
received in
 previous years, with priority going to institutions that participated in the 
program in
 FY1999 or earlier. Next funds are allocated to those institutions that began

began participating after FY1999, but which are not first- or second-time participants.
Following this, funds are allocated to institutions that are first- or second-year
participants.
Provided that sufficient funds are appropriated, institutions that participated in
the FSEOG program in FY1999 or earlier receive 100% of their FY1999 allocation.
This is referred to as their base guarantee. Institutions that began participating after
FY1999, but which are not first- or second-time participants receive a base guarantee
that is the greater of 90% of the amount they received in their second year of
participation, or $5,000. Institutions participating in the FSEOG program for their
first or second year receive as their base guarantee, the greatest of $5,000, 90% of an
amount proportional to that received by comparable institutions, or 90% of what the
institution received in its first year of participation. However, if an institution began
participating in FSEOG after FY1999 and received a larger allocation in its second
year of participation than in its first, it is allocated 90% of the amount it received in
its second year of participation. Institutions’ base guarantees are adjusted to be
proportional to the ratio of total funds available for the FSEOG program to the
national total of institutions’ base guarantees. This amount is called an institution’s
adjusted base guarantee.8

6

Ibid., pp. 7-2 through 7-3.

7

An independent student is one who is not considered dependent upon his or her parent’s
income for financial aid purposes.

8

In instances where total funds available is greater than or equal to the national total of base
guarantees, then the base guarantee and the adjusted base guarantee would be equal.

 CRS-4The allocation procedures for each of the three campus-based programs are described in
more detail in CRS Report RL32775, The Campus-Based Financial Aid Programs: A
Review and Analysis of the Allocation of Funds to Institutions and the Distribution of Aid
to Students, by David P. Smole.

 CRS-4
national total of institutions’ base guarantees. This amount is called an institution’s
adjusted base guarantee.9
After allocating institutions their adjusted base guarantee, any remaining
FSEOG funds are allocated to institutions proportionately according to their eligible
amount of need that is in excess of their adjusted base guarantee. An institution’s
eligible amount of need, or fair share, is calculated by subtracting the sum of aid
provided under the Pell Grant and LEAP/SLEAP programs from the aggregate
financial need of the institution’s undergraduate students. Undergraduate student
financial need is determined through a formula that takes into account the cost of
attendance (COA) at the institution and the expected family contribution (EFC) of a

a representative sample of students.910 Institutions with a fair share amount of need that

that is greater than their FSEOG adjusted base guarantee are considered to have an excess

excess eligible amount of need. These institutions receive an allocation in excess of their

their base guarantee, which is called their fair share increase. Institutions’ total allotments

allotments are the sum of their adjusted base guarantee and their total fair share 
increase.1011
Other FSEOG Funding Provisions. Institutions are provided flexibility
to carryover up to 10% of their allocation for use in a succeeding fiscal year to carry
out the FSEOG program. They also may carry-back funds to make grants to students
prior to the beginning of the fiscal year, but after the end of the prior academic year.
The Secretary is authorized to reallocate any excess funds returned by institutions.
An institution returning more than 10% of its allocation will have its next year’s
allocation reduced by the amount returned, unless the Secretary determines it would
be contrary to the interest of the program. Finally, the Secretary is authorized under
FSEOG to allocate up to 10% of funds appropriated in excess of $700,000,000 for
the programs authorized under HEA Title IV, Part A,1112 to institutions from which
50% or more of Pell Grant recipients either graduate or transfer to four-year
institutions.

9

In instances where total funds available is greater than or equal to the national total of base
guarantees, then the base guarantee and the adjusted base guarantee would be equal.

10

ED has calculated a table of EFCs used in the campus-based funding process. The table
includes average EFCs within 14 income bands for dependent and independent
undergraduates, and for graduate and first professional students. The EFC for students is
based on information from the second preceding fiscal year. EFCs from this table, rather
than the actual EFCs of students at a particular institution, are entered into the allocation
formula. The table of EFCs for the 2004-2005 award year is available from ED at
[http://www.ifap.ed.gov/dpcletters/attachments/CB0401EFC0405charts.xls].
1011

Institutions may receive both an initial fair share increase and an additional fair share
increase, the latter being based on the reallocation of excess funds returned by other
institutions (described in the next section).

11
12

HEA Title IV, Part A — Grants to Students in Attendance at Institutions of Higher
Education, includes the following programs: Pell Grants, TRIO, GEAR-UP, Academic
Achievement Incentive Scholarships, FSEOG, LEAP, Migrant and Seasonal Farmworker
Programs, the Robert C. Byrd Honors Scholarship Program, Child Care Access Means
Parents in School, and Learning Anytime Anywhere Partnerships.

 CRS-5

Federal Work-Study Programs12Programs13
The purpose of FWS is to provide part-time employment to undergraduate,
graduate, and professional students in need of earnings to pursue their course of
study; and to encourage student participation in community service activities. FWS
programs are authorized under the HEA at Title IV, Part C. They first were
authorized under the Economic Opportunity Act of 1964 (P.L. 88-452) and
administered by the U.S. Department of Labor’s Office of Economic Opportunity.
In 1968, under P.L. 90-575, authority for the Work-Study Programs was transferred
to Title IV of the HEA.
An institution’s financial aid administrator is responsible for awarding FWS aid
to eligible students. Unlike the FSEOG and Perkins Loan programs in which aid is
required to be awarded first to students with exceptional financial need, FWS aid
may be provided to any student demonstrating financial need. Awards typically are
based on factors such as each student’s financial need, the availability of FWS funds,
and whether a student requests FWS employment and is willing to work.1314 Students
receive their award as compensation for the hours they have worked. Earnings from
FWS employment are considered “excludable income” in determining a student’s
financial need for the subsequent year. Awards are based on a combination of factors
such as a student’s financial need, financial aid available from other sources, the
wage rate, and how many hours per week the student can work. There is no
maximum award amount.
FWS Employment. FWS employment may consist of work for the higher
education institution a student attends, for a private non-profit organization, for a
federal, state, or local public agency, or for a private for-profit organization.
Conditions applicable to all types of FWS employment include that it:
(A) will not result in the displacement of employed workers or impair existing
contracts for services;
(B) will be governed by such conditions of employment as will be appropriate
and reasonable in light of such factors as type of work performed, geographical
regions, and proficiency of the employee;
(C) does not involve the construction, operation, or maintenance of so much of
any facility as is used or is to be used for sectarian instruction or as a place for
religious worship; and

1213

This report covers only FWS programs authorized under Part C of the HEA. The LEAP
program provides federal funds that can be used by states to support state work-study
programs (see CRS Report RS21183, Leveraging Education Assistance Partnership
Program (LEAP): An Overview, by Laura L. Monagle). The Department of Veterans
Affairs also administers the Veterans Administration Student Work-Study Allowance
Program (VASWSAP) for veterans and eligible persons. Authorization for this program is
codified at 38 U.S.C. §§ 3485 and 3537.

13
14

U.S. Department of Education, Office of the Under Secretary., Planning and Evaluation
Service, Postsecondary, Adult, and Vocational Education Division, The National Study of
the Operation of the Federal Work-Study Program: Summary Findings from the Student
and Institutional Surveys (Washington, D.C., 2000), p. 57.

 CRS-6
(D) will not pay any wage to students employed ... [through the FWS program]
that is less than the current federal minimum wage as mandated by Section 6(a)
of the Fair Labor Standards Act of 1938.1415

Students working for private for-profit organizations must be employed in jobs
that are academically relevant to their pursuits. Furthermore, such students cannot
be employed under FWS if they otherwise would have been employed by the
organization. Students employed by proprietary institutions that they also attend
either must be employed on-campus in jobs that, in addition to the abovementioned
requirements, also provide student services directly related to the student’s education;
or in community service jobs. Proprietary institutions cannot employ FWS students
in jobs that involve the solicitation of other students to attend the institution.
Employment by private for-profit organizations must be arranged between the
sponsoring institution and the for-profit organization.
FWS Community Service Employment. Since FY2000, institutions
participating in FWS have been required to use at least 7% of their FWS allocation
to compensate students employed in community service jobs, including 100% of any
excess FWS funds they receive through reallocation of other institutions’ unspent
FWS funds.1516 In meeting the 7% requirement, institutions are required to ensure that
they are operating at least one tutoring or family literacy project in service to the
community. Institutions may use up to 10% of the funds they receive for
administrative expenses under section 489 of the HEA for the operation of their FWS
community service programs. The HEA defines community service as follows:
COMMUNITY SERVICES. — For purposes of this part, the term “community
services” means services which are identified by an institution of higher
education, through formal or informal consultation with local nonprofit,
governmental, and community-based organizations, as designed to improve the
quality of life for community residents, particularly low-income individuals, or
to solve particular problems related to their needs, including:
(1) such fields as health care, child care (including child care services
provided on campus that are open and accessible to the community), literacy
training, education (including tutorial services), welfare, social services,
transportation, housing and neighborhood improvement, public safety, crime
prevention and control, recreation, rural development, and community
improvement;
(2) work in a project, as defined in Section 101(20) of the National and
Community Service Act of 1990 (42 U.S.C. § 12511(20));
(3) support services to students with disabilities, including students with
disabilities who are enrolled at the institution; and
(4) activities in which a student serves as a mentor for such purposes
as —
14
1515
16

HEA, Section 443(b)(1) (42 U.S.C. § 2753(b)(1)).

From FY1994 through FY1999, institutions were statutorily required to use 5% of their
FWS allocation to compensate students employed in community service jobs.

 CRS-7
(A) tutoring;
(B) supporting educational and recreational activities; and
(C) counseling, including career counseling.1617

Tutoring and family literacy projects include those that employ students as
reading tutors of children who are of preschool age or who are in elementary school,
or in family literacy projects. In many instances, FWS jobs in tutoring and family
literacy projects count toward an institution’s 7% community service requirement.
However, this may not always be the case. For instance, ED has determined that if
FWS students are employed as tutors in an institution’s daycare center and the center
is not open and accessible to the community, then the job could not be counted
toward satisfying the institution’s 7% community service requirement.1718
Job Location and Development Programs. Institutions may use up to
the lesser of 10% of their FWS allocation or $50,000 to establish or expand a job
location and development program operated either by the institution or jointly with
another institution. The program must locate and develop jobs, including community
service jobs, for currently enrolled students. Jobs located and developed should be
compatible with students’ scheduling needs and compliment their educational and
vocational goals. The federal share of funds used to operate the program cannot
exceed 80%. Job location and development programs cannot be used to find jobs at
the institution, nor should they be used to find jobs for students after graduation.
Federal and Non-Federal Shares of Compensation. Under the FWS
program, students are compensated with a combination of federal funding and a
matching amount provided either by the institution or the employer. The share of
compensation that may be provided through federal funding varies according to the
type of FWS employment. For most FWS jobs, the maximum federal share of
compensation is 75%; however, in certain instances, the federal share may be higher
(see Table 1). For employment in the private for-profit sector, the federal share of
compensation is limited to 50%. An institution’s matching share of compensation
may come from any source (other than FWS), and may be paid in the form of
services, such as tuition, room, board, or books provided by the institution. Table
1 highlights the maximum federal share of compensation for the various types of
FWS employment.

1617

HEA, Section 441(c) (42 U.S.C. § 2751(c)).

1718

ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-27 through 6-29, and 6-40.

 CRS-8

Table 1. FWS Requirements for Federal Share of Compensation
Type of FWS
employment

Maximum
federal share

Specific requirements

FWS — In general

75%

General requirement

Private non-profit
or government
agency other than
the institution

May exceed
75%, but not
exceed 90%,
consistent with
regulations

Employer selected for student on case-by-case
basis and otherwise would be unable to afford
cost of employment; and no more than 10% of
the institution’s FWS students are employed in
jobs for which the federal share exceeds 75%

Regulatory
exceptiona

100%

Determination by the Secretary that federal
share in excess of 75% is necessary to further
the purpose of the FWS program

Private for-profit
sector

50%

Employing for-profit organization must provide
non-federal share of compensation

Tutoring and
Literacy Projects

100%

Priority given to employment of students in
projects funded under the Elementary and
Secondary Education Act (ESEA)

Work Colleges

50%

Separate funding authorization; institution must
match dollar-for-dollar with non-federal funds

Source: HEA, Sections 443, 444, 447, 448 (42 U.S.C. §§ 2753, 2754, 2756a, 2756b); and ED, FSA
Handbook, vol. 6 — Campus-Based Programs, pp. 6-11 through 6-12.
a. Applicable for schools designated as eligible schools under the Developing Hispanic Serving
Institutions Program, the Strengthening Institutions Program, the American Indian Tribally
Controlled Colleges and Universities Program, the Alaska Native and Native Hawaiian-Serving
Institutions Program, the Strengthening Historically Black Colleges and Universities Program.

Work Colleges. FWS authorizes funding to support comprehensive worklearning programs at select institutions called “work colleges.” Work colleges are
institutions that make work-learning an integral part of their educational programs.
For an institution to qualify for the Work Colleges program, all resident students
must be required by the institution to participate in a work-learning program that is
an integral part of its educational philosophy. For purposes of the program, work
colleges can only be public or private nonprofit institutions and must have a
commitment of service to the community. Activities authorized under the Work
Colleges program include those generally authorized under FWS grants, including
job location and development. In addition, Work Colleges program funds may be
used to provide payments or credits to students participating in work-learning
programs, to promote and administer work-learning, and for the study of worklearning programs. Funding for the Work Colleges program is authorized separately
from the remainder of the FWS program. Institutions may transfer funds from the
FWS and Perkins Loan programs to the Work Colleges program.
Allocation of Funds to Institutions. Similar to the FSEOG program, FWS
funds are allocated to institutions of higher education according to a statutorily
prescribed formulaprocedures. Funds first are allocated to institutions based on previous year’s

 CRS-9
year’s allocations, with priority going to institutions that participated in the program in

in FY1999. These institutions are eligible to receive 100% of their FY1999 allocation

allocation as their base guarantee.1819 Institutions that began participating after 
FY1999, but
 which are not first- or second-time participants receive a base guarantee 
that is the
 greater of 90% of the amount they received in their first year of 
participation, or
 $5,000. Institutions participating in the FWS program for their first 
or second year
 receive as their base guarantee, the greatest of $5,000, 90% of an amount

amount proportional to that received by comparable institutions, or 90% of what the
institution received in its first year of participation. However, if an institution began
participating in FWS after FY1999 and received a larger allocation in its second year
of participation than in its first, it is allocated 90% of the amount it received in its
second year of participation. If sufficient funds are not appropriated, then
institution’sinstitutions’ awards are reduced proportionately, resulting in an amount called their
adjusted base guarantee.
Funds in excess of the amount required to meet institutions’ base guarantee are
allocated according to institutions’ proportionate share of excess eligible need. For
the FWS program, excess eligible need is the amount by which an institution’s share
of self-help need (fair share) exceeds its base guarantee. Self-help need is calculated
separately for undergraduate students, and graduate and professional students
according to formulas that take into account the cost of attendance at the institution
and the EFC of a representative sample of studentsapproximate EFCs of students attending the institution. Institutions whose 
grants are
 based in part on the need of independent students or those attending less than fulltime
than full-time are required to assist these students through FWS employment with a reasonable

reasonable portion of the FWS grant. The Secretary is authorized to allocate up to 
10% of funds
 appropriated for FWS that are in excess of $700,000,000 to institutions 
from which
 50% or more of Pell Grant recipients either graduate or transfer to four-year
fouryear institutions.
Institutions are provided flexibility to carryover up to 10% of their FWS funds
for use in a succeeding fiscal year to carry out the FWS program. If an institution
neither uses funds in the year for which they were granted, nor carries them over to
the next fiscal year, the Secretary may, in the next succeeding fiscal year, reallocate
them to other institutions within the same state. Up to 10% of an institution’s
allocation may be granted by the Secretary for the purpose of making grants to
students prior to the beginning of the fiscal year, but after the end of the prior
academic year. The Secretary also is required to reallocate any excess funds returned
by institutions to eligible institutions that in the previous fiscal year used at least 5%
of their FWS allocation to compensate students employed in tutoring in reading or
family literacy activities. Reallocated funds must be distributed to such institutions
according to their excess eligible need. Institutions returning more than 10% of their
allocation may, at the discretion of the Secretary, have their next year’s allocation
reduced by the amount returned.

1819

This is equal to the sum of its FY1999 (award year 1999-2000) base guarantee, plus its
initial award year 1999-2000 pro rata increase, plus the additional FWS funds the institution
received from the $17 million set aside for that year. These funds were awarded according
to criteria described below, to institutions that certified that they graduated or transferred
at least 50% of their Pell Grant recipients.

 CRS-10

Federal Perkins Loans
The Federal Perkins Loan program authorizes the allocation of federal funds to
institutions of higher education to assist them in capitalizing revolving loan funds for
the purpose of making low-interest loans to students with exceptional financial need.
The Federal Perkins Loan program is authorized under the HEA at Title IV, Part E.
It supersedes Title II — Loans to Students in Institutions of Higher Education, of the
National Defense Education Act of 1958 (P.L. 85-864), which was incorporated into
the HEA through the Education Amendments of 1972 (P.L. 92-318). Previously,
these loans were known as National Defense Student Loans (Defense Loans) and
National Direct Student Loans (NDSLs).
Institutions capitalize revolving loan funds created under the Perkins Loan
program with a combination of federal and institutional capital contributions (FCCs
and ICCs, respectively). Institutions apply to ED for FCC funds which are allocated
according to formula. procedures similar to those used for the FSEOG and FWS programs.
Each institution’s ICC must be equal to one-third of the FCC.
 After making loans, 
institutions recapitalize their loan funds by depositing the
 principal and interest 
repaid by students who borrowed under the program, as well
 as any other charges or 
earnings associated with the operation of the program.
Award Procedures and Terms of Perkins Loans. Institutions are
required to establish written selection procedures for awarding Perkins Loans to
eligible students and to keep these on file at the institution. Loans must be made
reasonably available to all eligible students, to the extent that funds are available, and
priority must be given to students with exceptional financial need. Institutions’
selection procedures may include individuals’ willingness to repay the loan.
Undergraduate students (including those seeking an additional undergraduate
degree, if they are otherwise eligible), and graduate and professional students are
eligible to borrow from the institutions they attend under the Perkins Loan program.
Students studying abroad in programs approved for academic credit by participating
institutions also may receive Perkins Loans. Under the terms of the program, the
maximum amount a student may borrow per academic year is $4,000 for
undergraduate students, and $6,000 for graduate and professional students. The
maximum aggregate amount that a student may borrow is limited to $20,000 in
unpaid principal for undergraduate students who have completed two years of study,
but who have not completed their baccalaureate degree; $40,000 for graduate and
professional students; and $8,000 for any other students. Both the annual and
aggregate loan limits may be increased by up to 20% for students studying abroad in
approved programs. If the amount of an institution’s FCC is based in part on
independent students or those studying less than full-time, then these students must
be provided with a reasonable portion of the Perkins Loans made by the institution.
Interest on Perkins Loans is fixed at a rate of 5% per year.1920 However, no
interest accrues prior to a student beginning repayment, nor while repayment is

19

When first authorized as Defense Loans, the interest rate was set at 3%. In 1980, P.L. 96374 raised the NDSL interest rate to 4%. In 1981, P.L. 97-35 raised the NDSL interest rate
(now Perkins Loans) to its current level of20

Loans made prior to July 1, 1981 were at 3%; loans made between July 1, 1981 and Sept.
30, 1981 were at 4%; and loans made on or after Oct. 1, 1981 are at 5%.

 CRS-11
suspended during deferment (described below). Borrowers must begin repaying
Perkins Loans nine months after they no longer are enrolled at least half-time, and
must complete repayment within 10 years after beginning repayment. Institutions
may establish incentive repayment programs in which they may reduce the interest
rate by up to one percentage point in instances where a student makes 48 consecutive
payments. In addition, if a student repays a Perkins Loan in full prior to the end of
the repayment period, an institution may discount the loan balance owed by up to 5%
at the time the repayment is made. However, institutions may not use either federal
or institutional funds from the Perkins revolving loan fund to absorb the costs of
incentive repayment programs and must reimburse the fund on a quarterly basis for
any lost income.
Deferment. In general, deferment is a period during which a borrower is not
required to make payments on the loan balance and during which interest does not
accrue. Borrowers are not required to make payments on principal or interest while
they are enrolled at least half-time at an eligible institution, nor while they are
pursuing a graduate fellowship or rehabilitation training program approved by the
Secretary. They also may not be required to make payments while they are seeking,
but unable to find, full-time employment, or while experiencing economic hardship
(for up to a maximum of three years in each instance). In addition, borrowers are
eligible for concurrent deferment during any period while they are engaged in types
of service which make them eligible for loan cancellation (discussed later).
Borrowers are not required to request deferment in writing, but must provide the
institution with information necessary to document their deferment status. They also
are not required to resume making payments until six months following the
completion of any of the periods described above for which they are exempted from
making payments. Time in deferment does not count toward the 10-year repayment
period.
Forbearance. In general, forbearance is a temporary suspension or
postponement of payments during which interest continues to accrue. A borrower
may be granted forbearance from paying principal and interest or of principal only
if the borrower’s debt burden due to HEA student financial assistance loans is greater
than or equal to 20% of the borrower’s gross income, or if the institution determines
that forbearance should be granted for other reasons. Examples include services in
AmeriCorps or for reasons due to a “national military mobilization or other national
emergency.”2021 Borrowers are required to request forbearance in writing. Forbearance
may be granted for a period of up to one year at a time, and may be renewed for a
total period of up to three years.
Cancellation. Individuals who have engaged in the following types of public
service are eligible to have their loans cancelled.2122
!

elementary or secondary school teacher at a public or private school
eligible for federal aid under Title I-A of the ESEA and in which

2021

ED, FSA Handbook, vol. 6 — Campus-Based Programs, p. 6-71.

2122

HEA, Section 465(a) (20 U.S.C. § 1087ee(a)).

 CRS-12

!
!

!
!
!
!
!
!

low-income students are more than 30% of the school’s
enrollment;2223
full-time staff member in a Head Start program;
full-time special education teacher or a professional provider of
Individuals with Disabilities Education Act (IDEA) early
intervention services;
member of the U.S. Armed Forces in an area of hostilities;
Peace Corps Americorps*VISTA volunteer;
full-time federal, state, or local law enforcement or corrections
officer (including prosecuting attorneys, but not public defenders);
full-time teacher of mathematics, science, foreign languages,
bilingual education, or other shortage subject area;
full-time nurse or medical technician; or
full-time employee of a public or private nonprofit agency serving
high-risk children from low-income communities and their families.

Perkins Loan cancellation is based both on the number of years of service an
individual has completed and a rate of cancellation applicable to the particular type
of service. Table 2 presents the percentage of the principal of Perkins Loans that is
cancelled for each year of service in an activity eligible for Perkins Loan cancellation.
The terms of the program prescribe that the amount of principal and interest
cancelled for public service shall not be considered as income for purposes of the
Internal Revenue Code (IRC) of 1986.

2223

Teacher cancellations may be granted only to individuals teaching in a school serving
children from low-income families and which is listed in the Directory of Designated LowIncome Schools for Teacher Cancellation Benefits.

 CRS-13

Table 2. Perkins Loan Cancellation Rates by Type of Service
Percent of Perkins Loan principal
cancelled per year of service
Type of service

1st and 2nd
years

3rd and
4th years

5th year
and later

Elementary or secondary school
teacher in designated ESEA Title I-A
school

15%

20%

30%

100%

Staff member in Head Start program

15%

15%

15%

100%

Special education teacher/IDEA
professional provider

15%

20%

30%

100%

Armed Forces in area of hostilities

12½%

12½%

N/A

50%

Peace Corps or Americorps*VISTA
volunteer

15%

20%

N/A

70%

Law enforcement or corrections
officer

15%

20%

30%

100%

Full-time teacher in shortage subject
area

15%

20%

30%

100%

Nurse or medical technician

15%

20%

30%

100%

Employee of provider of services to
high-risk children and families

15%

20%

30%

100%

Max.
total

Source: HEA, Section 465 (20 U.S.C. § 1087ee).

The Secretary is required to reimburse institutions for Perkins Loans cancelled
for students engaged in public service. Funds for reimbursing institutions for loan
cancellations may not come from the appropriation designated for FCCs. Each year,
the Secretary is required (to the extent feasible), to reimburse institutions within three
months after they file their applications for campus-based funds.
Borrowers’ liability to repay Perkins Loans also is cancelled upon death or
becoming permanently and totally disabled, as determined according to regulations
issued by the Secretary. However, institutions are not reimbursed by the Secretary
for loans cancelled due to death or disability.
Loan Default. In general, a Perkins Loan is considered to be in default if the
borrower has failed to comply with the terms of the promissory note or failed to make
payments on a loan for 240 days (for a loan repayable monthly) or 270 days (for a
loan repayable quarterly). The cohort default rate for an institution is defined as the
percentage of current and former students entering repayment on Perkins Loans
received for attendance at that institution who default on their loans before the end

 CRS-14
of the following award year.2324 For institutions with less than 30 students entering
repayment in any year, the cohort default rate is calculated over a three-year period.
A borrower who has defaulted on a loan may rehabilitate the loan by making 12
consecutive on-time payments. Rehabilitated borrowers are returned to regular
repayment status, begin a new 10-year repayment schedule, and have the default
remove from their credit history. A borrower may rehabilitate a loan only once.
In certain instances where a school has followed due diligence procedures and
is unable to collect payments on a loan in which the amount owed is $25 or more, the
school may assign a Perkins Loan (or NDSL) for collection to Federal Student Aid
(FSA) Collections at ED. Upon accepting a loan, ED acquires all rights in the loan
and any payments made to the lending institution must be forwarded to ED.2425 Any
Perkins Loan collections received by ED are returned to the U.S. Treasury.
Allocation of Funds to Institutions. Under the Perkins Loan program,
funds are allocated to institutions according to formulasprocedures using a two-stage process
somewhat similar to that used for the FSEOG and FWS programs — funds first are
allocated according to institutions’ previous year’s allocations (base guarantee), and
any remaining funds are allocated according to institutions’ share of excess eligible
amounts of student need (fair share increase). Unlike the formulas for the FSEOG
and FWS programs, however, the Perkins Loan allocation formulas also include a
default penalty applicable to institutions with large proportions of borrowers
defaulting on their Perkins Loans. The default penalty is used to limit the awarding
of Perkins Loan FCCs only to institutions with cohort default rates below a
maximum threshold. Institutions with a cohort default rate of less than 25% are
assigned a default penalty of “one”1 and those with a default rate of 25% or greater are
assigned a default penalty of “zero.”0.
According to the allocation formulas, FCC funds first are allocated to
institutions according to their previous year’s allocations with priority going to
institutions that participated in the Perkins program in FY1999. These institutions
are eligible to receive 100% of their FY1999 allocation.2526 Institutions that began
participating in the Perkins Loan program after FY1999, but which are not first- or
second-time participants, are eligible to receive 100% of the amount they received
in their first year of participation. Those institutions that began participating after
FY1999, and which are first or second time participants, generally are eligible to be
awarded either 90% of the amount they received in the previous year or 90% of the
amount awarded to comparable institutions on a per-capita basis. However, if an
institution began participating in the Perkins Loan program after FY1999 and
received a larger allocation in its second year of participation than in its first, it is
allocated 90% of the amount it received in its second year of participation if this is
2324

HEA, Section 462(g) (42 U.S.C. § 1087bb(g)).

2425

ED, FSA Handbook, vol. 6 — Campus-Based Programs, pp. 6-114 through 6-115.

2526

According to the Department of Education’s Explanation of Worksheet 2002-20032004-2005 Award
Period for the campus-based programs, this is equal to the institution’s award year 19992000 conditional guarantee, multiplied by its award year 1999-2000 cohort default penalty
factor, multiplied by a 60.77% reduction factor.

 CRS-15
a larger amount than it would otherwise receive. The minimum grant amount is
$5,000. Any institution with a default penalty of “zero,”0, however, has its FCC
allotment  allotment
reduced to zero0.
After allocating funds according to institutions’ previous year’s allocations, any
remaining FCC funds are allocated based on each institution’s fair share of excess
eligible student need. This is the amount by which an institution’s share of eligible
self-help need exceeds the amount already allocated to it according to its base
guarantee. Like in the FWS program, self-help need is calculated separately for
undergraduate students, and graduate and professional students according to formulas
that take into account the cost of attendance at the institution and the expected family
contribution of a representative sample of studentsinstitution’s COA and the approximate EFCs of students
attending the institution. However, for the Perkins
 program, an institution’s eligible 
amount of need is the amount of the institution’s
 self-help need, minus the 
institution’s collections (defined as the amount the
 institution collected in the second 
year prior to the award year, multiplied by 1.21),
 multiplied by its cohort default 
penalty (“one” or “zero”either 1 or 0).
The Secretary is authorized to reallocate any excess Perkins Loan funds returned
by institutions. Eighty percent of these funds must be reallocated to institutions
according to their excess eligible amounts of student need, while the remaining 20%
can be reallocated according to regulation established by the Secretary. An
institution returning more than 10% of its allocation will have its subsequent year’s
allocation reduced by the amount returned, unless waived by the Secretary as contrary
to the interest of the program.

Transfer of Funds Between Campus-Based Programs
Institutions are afforded flexibility in being able to transfer funds between the
campus-based programs in which they participate. They may transfer a total of 25%
of their allotment under the Perkins Loan program for use in the FSEOG or FWS
programs, or both. Institutions also may transfer up to 25% of their allotment under
the FWS program for use in the FSEOG program. However, no funds may be
transferred out of the FSEOG program.
Institutions generally have used their transfer authority to move funds to the
FSEOG program, primarily from FWS. For award year 2002-2003, based on data
reported to ED, 1,501 institutions participating in the FWS program transferred a
total of $104.1 million to the FSEOG program. In that same year, 197 institutions
transferred $7.2 million from Perkins to FSEOG and 66 institutions transferred
$945,000 from Perkins to FWS.26

2627

27

U.S. Department of Education, Office of Postsecondary Education, Federal CampusBased Programs Data Book 2004. Available at [http://www.ed.gov/finaid/prof/resources/
data/databook2004/index.html]. (Hereafter cited as ED, Federal Campus-Based Programs
Data Book, 2004.)

 CRS-16

Administrative Costs
Institutions participating in the campus-based programs are entitled to an
administrative cost allowance to cover the expenses of administering the programs.
Administrative cost allowances are determined according to the following schedule:
!
!
!

5% of the institution’s first $2,750,000 in expenditures; plus
4% of the institution’s expenditures greater than $2,750,000 and less
than $5,500,000; plus
3% of the institution’s expenditures in excess of $5,500,000.

In calculating administrative costs, institutions include both federal and institutional
expenditures.2728 Institutions have some discretion in determining how to allocate
administrative costs across the three campus-based programs. Administrative cost
allowances as claimed for the campus-based programs are shown in Table 3.

Table 3. Administrative Cost Allowances for the Campus-Based
Programs: Award Year 2002-2003
Campus-based
program
FSEOG

Administrative cost
allowance
$13,929,538

FWS

59,421,145

Perkins Loans

72,615,388

Total

145,966,071

Source: U.S. Department of Education, Office of Postsecondary Education, Federal Campus-Based
Programs Data Book 2004.

Funding and Program Data
This section presents budget information on past funding levels for the campusbased programs, and also program information including the number of institutions
participating in each program, the number of students awarded aid and average award
amounts, and the distribution of campus-based aid according to student and
institutional characteristics.

Funding for the Campus-Based Programs
The share of postsecondary student financial aid provided through the campusbased programs has decreased steadily over the past 30 years. According to the
College Board, whereas in the 1971-1972 award year, 19.7% of total federal student
2728

HEA, Section 489 (20 U.S.C. § 1096); ED, FSA handbookHandbook, vol. 6 — Campus-Based
Programs, pp. 6-23 through 6-24.

 CRS-17
aid was provided through the campus-based programs, only 3.9% was in academic
year 2003-2004.2829 Now the greatest proportion of student aid is provided through
federal loans (other than Perkins Loans) and an increasing amount is provided
through higher education tax benefits. Over the past several years, funding has
increased modestly for the FSEOG program, while funding for the FWS and Perkins
Loan programs (FCCs and loan cancellations) has decreased. For FY2005, no
funding was provided for Perkins FCCs. Annual funding levels for each of the
campus-based programs, beginning with FY1999 (the first year since the HEA last
was reauthorized), are presented in Table 4.

Table 4. Campus-Based Program Funding: FY1999-20052006
($000s)

Fiscal year funding

FSEOG

FWS

PerkinsFCC

Perkins loan
cancellations

1999 Appropriation

$619,000

$870,000

$100,000

$30,000

2000 Appropriation

631,000a

934,000

100,000

30,000

2001 Appropriation

691,000

1,011,000

100,000

60,000

2002 Appropriation

725,000

1,011,000

100,000

67,500

2003 Appropriation

760,028

1,004,428

99,350

67,061

2004 Appropriation

770,455

998,502

98,764

66,665

2005 Appropriation

778,720

990,257

0

66,132

2006 Budget requestrequestb

778,720

990,257

0

0

Sources: U.S. Department of Education, Fiscal Year 2005 Justification of Appropriation Estimates
to the Congress, Volume II; U.S. Department of Education, Budget Service, Department of Education
Budget Tables, FY2005 Congressional Action.
a. Includes $10 million Emergency Appropriation for victims of Hurricanes Dennis and Floyd.

Each
b. As part of its FY2006 budget request, the Administration has proposed terminating the Perkins
Loan program.

Under each of the campus-based programs requires that federal funds be matched by
federal funds are required to be
matched by the participating institution (or the employer under FWS, if other than 
the institution).
 As previously described, under each of the programs, the 
institutional match
 generally is one-third the amount of the federal share (however, 
in the FWS program,
 the required match can be as high as one-half of the federal 
share or as low as zero,
 depending on the type of employment). Because of the 
matching requirements, the
 campus-based programs leverage federal funding to 
provide an amount of student
 financial aid that is greater than the amount of federal 
funds appropriated for each
 program.

2829

The College Board, Trends in Student Aid 2004 (Washington, D.C., 2004), pp. 6, 18.
Accessible at [http://www.collegeboard.com/prod_downloads/press/cost04/
TrendsinStudentAid2004.pdf].

 CRS-18
Table 5 compares the amount of funds appropriated for each of the campusbased programs with the amount of aid made available to students. It does this for
FY2001FY2002 (award year 2001-20022002-2003 — the last year for which final program data are
available) and prospectively for FY2005FY2006 (award year 2005-20062006-2007 and the current
budget cycle). During award year 2001-20022002-2003, the amount of aid provided under the
FSEOG program (including funds transferred from FWS and Perkins Loans) was
45.842.6% greater than the amount of federal funds provided, while aid provided through
FWS was 2.18.6% greater. Aid provided through Perkins loans was close to eight times
more than eight
times greater than the amount of federal funds provided.2930 The table also shows the amount

amount of campus-based financial aid that is expected to be made available to students

students during award year 2005-20062006-2007 based on the administration’s FY2005FY2006 budget 
request.

Table 5. Aid Available to Students Under
Campus-Based Programs
($000s)

Appropriatio
n Appropriation
(FY2002)

Aid available
to students:
AY2002-2003
(actual)a

FSEOG

$725,000

$1,033,811

$778,720

$985,722

FWS

1,011,000

1,097,497

990,257

1,184,229

167,500500b

1,460,207

0

0

1,903,500

3,591,515

1,769,977

2,169,951

Campus-based
program

Perkins Loans:
FCC and Loan
Cancellations
Total

Aid available
to students:
AY2006-2007
(estimated)a

Budget
request
(FY2006)

Sources: ED, Federal Campus-Based Programs Data Book, 2004; and Office of Management and
Budget, Budget of the United States: Fiscal Year 2006 — Appendix: Department of Education, p. 362.
a. Aid available includes budget authority, institutional or employer matching funds, transfers across
programs as authorized, and the subtraction of administrative costs.
b. Includes FCCs and reimbursements for loan cancellations.

Institutional Participation
In Fallfall 2002, 6,508 postsecondary institutions participated in HEA Title IV
financial aid programs.3031 During award year 2002-2003, approximately 57% of Title
IV eligible institutions participated in the FSEOG program, while approximately 50%

2930

It is important to note that the amount of student aid provided under the Perkins loan
program is so much greater than the amount appropriated because, as a revolving loan fund,
repayments from previously made loans (capitalized largely with federal dollars), in addition
to funds from the FCC, ICC, and federal reimbursement for loan cancellations, are used to
capitalize new ones.
3031

U.S. Department of Education, National Center for Education Statistics, Postsecondary
Institutions in the United States: Fall 2002 and Degrees and Other Awards Conferred:
2001-2002. Oct. 2003.

 CRS-19
participated in FWS. However, only approximately 27% of Title IV institutions
participated in the Perkins Loan program. While fewer institutions of all types
participate in Perkins Loan program than in either FSEOG or FWS, far fewer twoyear and proprietary participate in the Perkins Loan program than the other two
programs.3132 It is possible that these lower levels of participation are due to factors
such as the administrative burden of administering a revolving loan fund and the
generally higher cohort default rates of students who attend these types of
institutions.
Figure 1. Institutions Participating in the Campus-Based Programs:
Award Years 1984-1985 through 2004-2005
5,000

Institutions

4,000

3,000

2,000

1,000

Award Year20

04

-2
0

05

04

03
20

03

420
0

20
0

3-

20

20
0

2-

120
0

FWS

20

02

01

20

00
20
0

0-

20
9-

FSEOG

20

99

19
9

19
9

8-

19
7-

19
9

619
9

19

98

97

96

19

95
519
9

19
9

4-

19

19
3-

19
9

219
9

19

94

93

92

19

91
119
9

19
9

0-

19

19

90

89
919
8

19
8

8-

19

19

88

87
19
8

7-

19

19

86
19
8

6-

19
5-

19
8

19
8

4-

19-2
0

20

02

01
20

FWS

-2
0

02

01

-2
0

00
20

00

-2
0
99

19

FSEOG

-2
0

99

98
19

98

-1
9

97
19

97

-1
9
96

19

95
19

Award Year

-1
9

96

95

-1
9

94
19

94

-1
9

93
19

93

-1
9
92

19

-1
9

92

91
19

91

-1
9
90

19

89
19

-1
9

90

89

-1
9

88
19

88

-1
9
87

19

-1
9

87

86

-1
9
86

19

85
19

19

84

-1
9

-1
9

85

-

Perkins

Sources: ED, Federal Campus-Based Programs Data Book, 2003;and ED, Federal Campus-Based Programs
Data Book, 2004.

Over the past decade, there has been a slight increase in the number of
institutions participating in the FSEOG and FWS programs. Institutional
participation in the Perkins Loan program, however, has continued a pattern of
decline that has occurred over the past two decades. Figure 1 displays the number
of institutions participating in each of the campus-based programs since the 19841985 award year.

Students Served and Average Aid Amounts
This section presents information on the number of students being served and
the average award amounts for each of the three campus-based programs based on
program data from ED. To facilitate comparison of student award amounts over

3132

ED, Federal Campus-Based Programs Data Book, 20032004.

 CRS-20
time, these data have been adjusted to 2002 dollars according to the consumer price
index for all urban consumers (CPI-U).3233
FSEOG. FSEOG program data on the number of students granted awards and
the average award amount since 1980 (in constant 2002 dollars) are presented in
Figure 2. Once the smallest of the three campus-based programs in terms of the
number of students served, the FSEOG program has grown steadily since its
inception in the 1967-1968 award year to become the largest today. Since award year
1989-1990, it has served more students annually than either of the other two campusbased programs. The number of students receiving FSEOG awards increased
considerably during the 1990s, reaching 1.35 million in 2002-2003 (over twice as
many students as received awards in 1982-1983). The average amount of aid
provided per student under the FSEOG program is the lowest among the three
campus-based programs. As increasing numbers of students have been served
through FSEOG over the past 2two decades, the average FSEOG award amount has
decreased (in real terms) by 23%, from $997 in 1982-1983 (2002 dollars) to $763 in
2002-2003, though it has increased in current dollars.
Figure 2. FSEOG: Number of Students Receiving Awards and
Average Award Amounts

FSEOG Awards Granted

1,250,000

$2,500

$2,000

1,000,000
$1,500
750,000
$1,000
500,000

250,000

$500

$-

19


82
19 -83
83
19 -84
84
19 -85
85
19 -86
86
19 -87
87
19 -88
88
19 -89
89
19 -90
90
19 -91
91
19 -92
92
19 -93
93
19 -94
94
19 -95
95
19 -96
96
19 -97
97
19 -98
9
19 89919 9899 99
-2
0
20 00
00
20 -01
01
20 -02
02
-0
3

0

Average FSEOG Award

1,500,000

Students Served
Avg. Award
Avg. Award (2002 $'s)
Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based
Programs Data Book 2004.

FWS. FWS program data are presented in Figure 3. For most of the past 2two
decades, between 650,000 and 750,000 students have been served annually through
FWS. Since the mid-1980s, the average FWS award (in 2002 dollars) has remained
slightly below $1,500. From the 1994-1995 award year through the 1999-2000

3233

U.S. Department of Labor, Bureau of Labor Statistics.

 CRS-21
award year, institutions participating in the FWS program were required to expend
at least 5% of their initial and supplemental FWS allocations to compensate students
employed in community service jobs. Beginning with award year 2000-2001,
institutions are now required to expend 7% of their FWS allotment on community
service and to operate at least 1 tutoring or family literacy project. Success in
meeting the community service requirement is determined by dividing the total funds
used to compensate students employed in community service jobs by the institution’s
total FWS allocation. There is no explicit penalty for failing to meet the requirement.
Figure 3. FWS: Number of Students Receive Awards and Average
Award Amounts
1,500,000

$2,500

$2,000

1,000,000
$1,500
750,000
$1,000
500,000

Average FWS Award

FWS Awards Granted

1,250,000

$500

250,000

$-

19
8

282
19 -83
83
19 -84
84
19 -85
85
19 -86
86
19 -87
87
19 -88
88
19 -89
89
19 -90
90
19 -91
91
19 -92
92
19 -93
93
19 -94
94
19 -95
95
19 -96
96
19 -97
97
19 -98
9
19 89919 9899 99
-2
0
20 00
00
20 -01
01
20 -02
02
-0
3

0

Students Served

Students in Community Service

Avg. Award

Avg. Award (2002 $'s)

Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based
Programs Data Book 2004.

Table 6 shows the number and percentage of institutions meeting their
community  community
service requirements since award year 1994-1995. As can be seen by the
 table, while 
the 5% requirement was in place, the percentage of institutions in
 compliance trended 
upward. However, since the dual requirements of expending 7%
 of their allocation 
on community service employment and having at least one tutoring
 or family literacy 
project, institutions have struggled to remain in compliance. It
 appears that more 
institutions are having difficulty meeting the tutoring and family
 literacy project 
requirement than the 7% expenditure requirement. Since the
 community service 
requirements have been in place, ED reports that the number of
 students employed 
in community service increased from 58,596 in award year 199419951994-1995 to 131,295 in 
award year 2002-2003. The shaded portion of the bars in Figure
 3 indicates the 
number of students employed in community service.

 CRS-22

Table 6. Number and Percent of Institutions Meeting FWS
Community Service (CS) Requirements
Number
with a
tutoring
or family
literacy
project

Number
meeting
both
standards

Percent
meeting
applicable
standards

Award
year

Total FWS
institutionsa

Number
meeting CS
percent
expenditure
standard

1994-1995b

3,257

2,481

N/A

N/A

76.2

1995-1996b

3,249

2,781

N/A

N/A

85.6

1996-1997b

3,231

2,927

N/A

N/A

90.6

1997-1998b

3,282

2,859

N/A

N/A

87.1

1998-1999b

3,342

3,153

N/A

N/A

94.3

1999-2000b

3,230

2,919

N/A

N/A

90.4

2000-2001c

3,221

2,791

2,848

2,600

80.7

2001-2002c

3,250

2,870

2,905

2,715

83.5

2002-2003c

3,276

2,942

2,606

2,457

75.0

Sources: ED, Community Service in the FWS Program; and U.S. Department of Education, Office
of Postsecondary Education, Fiscal Operations Report program data for award years 1999-2000, 20002001, 2001-2002, and 2002-2003 from annual Fiscal Operation Reports and Applications to
Participate (FISAPs).
a. Institutions reporting expenditure of FWS authorizations. (A small number of institutions in
receipt  receipt
of FWS allotments, but not reporting the expenditure of funds for FWS, are excluded
 from the 
table.)
b. Requirement to expend 5% of FWS authorization on community service.
c. Requirement to expend 7% of FWS authorization on community service and to operate at least one
tutoring or family literacy project.

Perkins Loans. Historical data on the Perkins Loan program are provided in
Figure 4. Slightly fewer students receive aid through the Perkins Loan program than
through FWS, making it the smallest of the three campus-based programs in terms
of number of students served. Since 1982-1983, the annual number of students
served has averaged between 630,000 and 730,000. The average Perkins Loan
amount, however, is considerably greater than the amount of aid provided under
either FSEOG or FWS. Since the early 1990s, Perkins Loan amounts have averaged
between $1,700 and $2,000 (in 2002 dollars).

 CRS-23
During recent years, Perkins Loans cohort default rates have declined from a
high of 12.95% in 1997 to 8.35% in 2002, but increased slightly in 2003 to 8.85%.
This is indicated in Table 7. Four-year institutions typically have the lowest cohort
default rates, while those of two-year and proprietary institutions are much higher.
In comparison, FFEL/Direct Loan cohort default rates typically have been a few

 CRS-23
percentage points lower than rates for Perkins Loans.34 At the end of FY2003, the
Administration reports a total of $1.2 billion in outstanding defaulted Perkins Loans,
with $321 million of this amount assigned to ED for collection.35
Figure 4. Perkins Loans: Number of Students Receiving Awards and
Average Award Amounts
$2,500

1,500,000

$2,000

1,000,000
$1,500
750,000
$1,000
500,000

Average Perkins Loan

Perkins Loans Awarded

1,250,000

$500

250,000

$-

19
82
19 -83
83
19 -84
84
19 -85
85
19 -86
86
19 -87
87
19 -88
88
19 -89
89
19 -90
90
19 -91
91
19 -92
92
19 -93
93
19 -94
94
19 -95
95
19 -96
96
19 -97
97
19 -98
19 9899 99
-2
0
20 00
00
20 -01
01
20 -02
02
-0
3

0

Students Served

Avg. Award

Avg. Award (2002 $'s)

Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based
Programs Data Book 2004.

During recent years, Perkins Loans cohort default rates have declined from a
high of 12.95% in 1997 to 8.35% in 2002, but increased slightly in 2003 to 8.85%.
This is indicated in Table 7. Four-year institutions typically have the lowest cohort
default rates, while those of two-year and proprietary institutions are much higher.
In comparison, FFEL/Direct Loan cohort default rates typically have been a few
percentage points lower than rates for Perkins Loans.33 At the end of FY2003, the
Administration reports a total of $1.2 billion in outstanding defaulted Perkins Loans,
with $321 million of this amount assigned to ED for collection.34

Table 7. Perkins & FFEL/DL Cohort Default Rates: 1996-2003
Loan type

1996

1997

1998

1999

2000

2001

2002

2003

Perkins

12.57

12.95

12.48

11.54

10.61

9.99

8.35

8.85

FFEL/DL

10.7

10.4

9.6

8.8

6.9

5.6

5.9

5.4

Sources: ED, Federal Campus-Based Programs Data Books, 1996 through 2004; U.S. Department
of Education, Official Cohort Default Rates for Schools, National Student Loan Default Rates.

33

U.S. Department of Education. National Student Loan Default Rates, accessed via the
Internet at [http://www.ed.gov/offices/OSFAP/defaultmanagement/defaultrates.html].
34

Office of Management and Budget, Budget of the United States Government, Fiscal Year
2005 — Appendix, Department of Education, Office of Student Financial Assistance, p. 361.

 CRS-24

Distribution of Campus-Based Student Aid
This section presents information on the proportion of students receiving
campus-based financial aid and the average amount of aid received by students,
according to a number of student and institutional characteristics. Data from the
2000 National Postsecondary Student Aid Study (NPSAS) surveys of undergraduate,
and graduate and first professional students enrolled during the 1999-2000 academic
year are used to show the distribution of aid and the combinations of aid received
across the postsecondary student population.35
Table 8 presents NPSAS data on the proportion of students receiving Title IV
and campus-based financial aid and the average amounts of aid received by students
according to income quartiles by dependency status during academic year 19992000.36 The data show that while substantial proportions of postsecondary students
received Title IV aid, only a small amount of these students were served under the
campus-based programs. However, because participation in the campus-based
programs is need-based, those with lower incomes were served in greater proportion.
Table 8 shows that 39% of undergraduate students received federal financial aid
through the following Title IV programs: Pell Grants, Stafford Loans (FFEL and
DL), Parent Loans for Undergraduate Students (PLUS Loans), FSEOG, FWS, and
Perkins Loans. Of those students receiving aid, the average amount of aid was
$5,225. Only 10.2% of undergraduate students received campus-based financial aid,
with an average award amount of $1,549. Among graduate students, 29.5% received
aid under Title IV programs (Stafford Loans (FFEL and DL), FWS, and Perkins
Loans), with only 4.6% receiving campus-based aid. However, graduate students that
were awarded aid received substantially more on average than did undergraduates
($13,190 in Title IV aid, including $2,986 in campus-based aid). Thus, the average
graduate student who received campus-based aid received almost twice as much as
the average undergraduate student (despite the FSEOG program being restricted to
undergraduate students). However, the largest proportion of campus-based aid is
provided through Perkins Loans, which must be repaid.
NPSAS data indicate that during academic year 1999-2000, the FSEOG
program served the most students of the three campus-based programs — 5.9% of
undergraduates. The average grant amount was $678. Students in the lowest income
quartiles received FSEOGs in the greatest proportions. Dependent students tended
to receive much larger award amounts than independent students. For example, a
dependent student in the lowest income quartile received an average FSEOG award
of $821, whereas an independent student without a dependent in the lowest quartile
received an average FSEOG award of $647 and an independent student with a
dependent in the lowest quartile received an average FSEOG award of $500.
35

Because of sampling and nonsampling errors inherent in NPSAS and in surveys generally,
estimates of average aid amounts likely differ from those reported by ED’s program offices.
36

In Table 8, undergraduate students, and graduate and first professional students first are
grouped according to dependency status. Next, they are categorized according to income
quartiles within those groups. Because income tends to vary with dependency status,
income quartiles represent different ranges of income for each student group.

 CRS-25

Table 8. Percentage of Students Receiving Aid and Average Amount of Aid Received According to
Type of Aid, by Income and Dependency Status: 1999-2000
Federal Title IV aid
Income quartiles by dependency status
(Pell, Stafford, PLUS,
and student type
FSEOG, FWS, Perkins)
% of
Avg.b
Total
%a
Undergraduate students
(100%)
39.0
$5,225
Dependent
(49.1%)
Q1: Less than $31,149
66.2
$4,904
Q2: $31,149 to $54,418
43.7
$4,853
Q3: $54,420 to $83,491
37.3
$5,539
Q4: $83,492 or more
26.9
$6,285
Independent without dependent
(24.0%)
Q1: Less than $11,000
64.2
$5,983
Q2: $11,000 to $24,210
31.7
$5,750
Q3: $24,211 to $43,881
14.4
$6,071
Q4: $43,882 or more
6.4
$6,301
Independent with dependent
(26.9%)
Q1: Less than $13,335
63.5
$4,770
Q2: $13,335 to $27,635
56.8
$4,520
Q3: $27,636 to $50,338
27.7
$4,487
Q4: $50,339 or more
10.7
$6,129
Graduate and first professional
students
Independent without dependent
Q1: Less than $9,858
Q2: $9,858 to $24,522
Q3: $24,523 to $48,356
Q4: $48,357 or more

(100%)

Federal Campus-Based
aid (FSEOG, FWS,
Perkins)
%a
10.2

Avg.b
$1,549

24.5
14.0
7.8
2.8

FSEOG
%a

FWS

5.9

Avg.b
$678

$1,715
$1,963
$1,918
$1,826

16.7
4.3
0.9
0.1

19.7
3.7
0.7
0.3

$1,396
$1,411
$1,758
#

22.2
13.3
4.7
0.4

%a

Perkins Loans

4.1

Avg.b
$1,534

$821
$896
$880
#

10.5
8.3
5.5
2.1

15.3
1.3
0.2
0.2

$647
$651
#
#

$969
$974
$1,324
#

19.1
11.3
2.7
0.2

%a
3.2

Avg.b
$1,695

$1,464
$1,429
$1,553
$1,443

7.6
6.9
3.3
1.1

$1,693
$1,705
$1,681
$1,820

5.1
0.9
0.3
0.1

$1,636
$1,936
#
#

5.1
1.9
0.3
0.1

$1,829
$1,405
#
#

$500
$487
$549
#

4.1
1.9
1.1
0.2

$1,648
$1,865
$2,501
#

3.3
2.1
1.4
0.1

$1,588
$1,875
$1,405
#

29.5

$13,190

4.6

$2,986

^

^

1.4

$2,395

3.7

$2,767

62.8
39.3
22.2
10.0

$14,093
$12,958
$12,930
$12,894

16.3
5.9
2.0
0.5

$3,060
$2,852
$3,210
#

^
^
^
^

^
^
^
^

5.2
2.1
0.4
0.2

$2,476
$2,277
#
#

13.1
4.5
1.6
0.3

$2,724
$2,751
$3,277
#

(66.1%)

 CRS-26
Federal Title IV aid
Income quartiles by dependency status
(Pell, Stafford, PLUS,
and student type
FSEOG, FWS, Perkins)
% of
Avg.b
Total
%a
Independent with dependent
(33.9%)
Q1: Less than $29,742
41.0
$13,029
Q2: $29,742 to $52,908
21.2
$11,587
Q3: $52,909 to $80,265
16.5
$11,363
Q4: $80,266 or more
9.8
$13,197

Federal Campus-Based
aid (FSEOG, FWS,
Perkins)
%a

Avg.b
5.4
1.1
0.1
0.2

$2,719
#
#
#

FSEOG
%a

FWS

Avg.b
^
^
^
^

%a
^
^
^
^

Perkins Loans
Avg.b

1.5
0.1
0.0
0.0

Source: U.S. Department of Education, National Center for Education Statistics, 1999-2000 National Postsecondary Student Aid Study (NPSAS: 2000).
a. Percentage of students from an income quartile receiving aid.
b. Average amount of aid received by those students receiving aid.
# = Too small to report.
^ = Not applicable.

%a
#
#
#
#

Avg.b
4.4
1.0
0.1
0.2

$2,576
#
#
#

 CRS-27
In the FWS program, students with the lowest incomes also received FWS aid
in the greatest proportions, however the distribution of aid was somewhat different
than in the FSEOG program. Among undergraduate students, smaller proportions
of students in the lowest income quartile of each group received FWS aid than
received FSEOGs. However, greater proportions of dependent students in the second
and third quartiles received FWS aid than received FSEOGs. Although greater
proportions of dependent students received FWS awards than independent students,
independent students tended to receive larger award amounts. For all undergraduate
student groups, FWS awards were substantially higher than FSEOGs — $1,534 on
average, compared to $678 for FSEOG. Among graduate students, the average FWS
award amount was $2,395 and the majority of recipients were independent students
without dependents in the lowest two income quartiles.
Among undergraduate students, the distribution of Perkins Loans generally
paralleled that of FWS aid. However, average loan amounts across student groups
and income quartiles remained close to the overall undergraduate average. Graduate
students without dependents in the lowest income quartile received Perkins Loans in
the greatest proportion of any student group (13.3%). The average Perkins Loan
amount of a graduate student ($2,767) exceeded the average undergraduate amount
by over $1,000.
Table 9 presents a cross-sectional comparison of the types of federal Title IV
student financial aid received by students in academic year 1999-2000, arrayed
according to whether they were recipients of campus-based aid. The table highlights
that recipients of campus-based financial aid represent only a small minority of the
total student population. It shows that for the 10.2% of undergraduate students
receiving campus-based aid, nearly three-quarters also received Pell Grants (94.6%
of FSEOG recipients also received Pell Grants). It also shows that undergraduate
recipients of campus-based aid relied on federal loans in much higher proportions
than students who did not receive campus-based aid. For example, 68.4% of
undergraduate campus-based aid recipients borrowed under the subsidized Stafford
Loan program and 25.4% borrowed under the unsubsidized Stafford Loan program.
This contrasts with only 18.0% and 13.7% of non-recipients of campus-based aid
borrowing under the respective Stafford Loan programs.
Graduate and first professional students who were recipients of campus-based
aid (4.6% of the total) also relied much more heavily on Stafford Loans (both
subsidized and unsubsidized) to finance their education than did non-recipients of
campus-based aid. Table 9 shows that 94.1% of campus-based aid recipients
borrowed under the subsidized Stafford Loan program and 76.1% borrowed under
the unsubsidized Stafford Loan program. Of the 95.4% of graduate students not
receiving campus-based aid, only 23.6% received subsidized Stafford Loans and only
20.1% received unsubsidized Stafford Loans.
These data show that large proportions of students receiving campus-based aid
still relied heavily on borrowing to meet their financial aid needs. Graduate students,
however, borrowed in greater proportions and also borrowed much larger amounts.
Table 10 presents information on the distribution of campus-based student aid
both for undergraduate students and graduate and first professional students

 CRS-28
according to the type of institution they attended and their pattern of attendance. For
both undergraduate, and graduate and professional students, the proportion receiving
campus-based aid was the greatest among those attending private not-for-profit
institutions. The proportion of students attending private not-for-profit institutions
who received campus-based aid was approximately twice that of students attending
public institutions.
Both undergraduate and graduate students with exclusively full-time attendance
patterns received campus-based aid in the greatest proportions (16.3% and 9.6%,
respectively). Those with mixed attendance patterns received aid in the next highest
proportions. The data show that students enrolled half-time or less received only a
small proportion of campus-based financial aid.

 CRS-29

Table 9. Cross-Section of Percent of Students Receiving Aid and Amount of Aid Received According to
Type of Aid, by Program: 1999-2000
Recipients of Title VI
student aid, by type

Undergraduate students
Title IV Aid
No
Yes
Campus-based
No
Yes
FSEOG
No
Yes
FWS
No
Yes
Perkins Loans
No
Yes
Graduate students
Title IV Aid
No
Yes
Campus-based
No
Yes
FWS
No
Yes

Pell Grants
(max. $3,125)
% of
Total
(100%)

%a

FSEOG

23

Avg.b
$1,910

(61.0%)
(39.0%)

0
58

(89.8%)
(10.2%)

%a

FWS

6

Avg.b
$678

#
$1,910

0
15

17
73

$1,768
$2,201

(94.1%)
(5.9%)

18
95

(95.9%)
(4.1%)

%a
4

Avg.b
$1,534

#
$678

0
11

0
58

#
$678

$1,789
$2,280

0
100

21
57

$1,885
$2,136

(96.8%)
(3.2%)

21
61

(100%)

Perkins Loans
%a
3

Avg.b
$1,695

#
$1,534

0
8

0
40

#
$1,534

#
$678

3
21

5
31

$595
$984

$1,889
$2,131

5
37

^

^

(70.5%)
(29.5%)

^
^

(95.4%)
(4.6%)
(98.6%)
(1.4%)

Stafford Loans
(subsidized)
%a
23

Avg.b
$3,214

#
$1,695

0
59

0
32

#
$1,695

$1,500
$1,610

2
20

0
100

#
$1,534

$579
$1,075

3
34

^

^

^
^

^
^

^
^

^
^

^
^

^
^

Stafford Loans
(unsubsidized)
%a
15

Avg.b
$3,328

#
$3,214

0
38

18
68

$3,147
$3,371

$1,670
$1,738

21
62

2
27

$1,692
$1,701

$1,524
$1,560

0
100

1

$2,395

^
^

0
5

^
^

^
^

^
^

^
^

PLUS Loans
%a
3

Avg.b
$7,080

#
$3,328

0
7

#
$7,080

14
25

$3,386
$3,052

2
6

$7,199
$6,679

$3,196
$3,311

14
26

$3,360
$3,049

3
3

$7,217
$5,105

21
72

$3,176
$3,477

15
18

$3,350
$2,886

3
9

$7,048
$7,290

#
$1,695

21
89

$3,180
$3,457

14
28

$3,334
$3,223

3
10

$7,156
$6,462

4

$2,767

27

$7,099

23

$8,067

^

^

#
$2,395

0
12

#
$2,767

0
91

#
$7,099

0
77

#
$8,067

^
^

^
^

0
31

#
$2,395

0
79

#
$2,767

24
94

$6,951
$7,866

20
76

$7,937
$8,782

^
^

^
^

0
100

#
$2,395

3
39

$2,747
$2,878

26
91

$7,080
$7,478

22
70

$8,008
$9,351

^
^

^
^

 CRS-30
Recipients of Title VI
student aid, by type

Pell Grants
(max. $3,125)
% of
Total

Perkins Loans
No
Yes

(96.4%)
(3.6%)

%a

FSEOG

Avg.b
^
^

%a
^
^

FWS

Avg.b
^
^

%a
^
^

Avg.b
1
15

$2,397
$2,391

Perkins Loans
%a
0
100

Avg.b
#
$2,767

Stafford Loans
(subsidized)
%a

Avg.b
24
96

$6,957
$8,039

Stafford Loans
(unsubsidized)
%a

Avg.b
20
80

$7,956
$8,827

Source: U.S. Department of Education, National Center for Education Statistics, 1999-2000 National Postsecondary Student Aid Study (NPSAS: 2000).
a. Percentage of students from row category receiving aid.
b. Average amount of aid received by those students receiving aid.
# = Too small to report.
^ = Not applicable.

PLUS Loans
%a

Avg.b
^
^

^
^

 CRS-31

Table 10. Percentage of Students Receiving Aid and Average Amount of Aid Received According to
Type of Aid, by Institution Type and Attendance Pattern: 1999-2000
Income quartiles by
dependency status and student type

Title IV aid (Pell, Stafford,
PLUS, FSEOG, FWS,
Campus-based aid
Perkins)
(FSEOG, FWS, Perkins)

Undergraduate students
Dependent
Q1: Less than $31,149
Q2: $31,149 to $54,418
Q3: $54,420 to $83,491
Q4: $83,492 or more
Independent without dependent
Q1: Less than $11,000
Q2: $11,000 to $24,210
Q3: $24,211 to $43,881
Q4: $43,882 or more
Independent with dependent
Q1: Less than $13,335
Q2: $13,335 to $27,635
Q3: $27,636 to $50,338
Q4: $50,339 or more

% of
Total
%a
(100%) 0.6
(49.1%)
1.0
0.9
0.9
0.7
(24.0%)
1.3
1.3
0.8
0.6
(26.9%)
1.4
1.5
1.2
0.7

Graduate and first professional students
Independent without dependent
Q1: Less than $9,858
Q2: $9,858 to $24,522
Q3: $24,523 to $48,356
Q4: $48,357 or more

(100%) 0.7
(66.1%)
1.4
1.3
1.2
0.9

Avg.b

%a

FSEOG

Avg.b

%a

FWS
%a

Perkins Loans

$54

0.3

$38

0.2

Avg.b
$23

0.2

Avg.b
$35

%a
0.1

Avg.b
$31

$85
$79
$95
$125

0.8
0.6
0.4
0.2

$51
$62
$70
$94

0.7
0.3
0.1
0.0

$34
$56
$134
#

0.6
0.5
0.4
0.2

$47
$43
$61
$63

0.4
0.4
0.3
0.2

$48
$49
$73
$162

$135
$150
$166
$308

1.0
0.5
0.1
0.1

$80
$138
$233
#

0.9
0.3
0.1
0.1

$40
$103
#
#

0.5
0.2
0.1
0.0

$118
$332
#
#

0.4
0.3
0.1
0.0

$93
$106
#
#

$129
$129
$159
$232

1.3
1.0
0.5
0.1

$57
$81
$167
#

1.2
1.0
0.4
0.1

$26
$30
$44
#

0.4
0.3
0.4
0.1

$128
$235
$369
#

0.4
0.3
0.3
0.0

$88
$97
$133
#

$207

0.5

$179

^

^

0.2

$312

0.4

$174

$395
$316
$376
$593

1.7
0.7
0.5
0.3

$229
$222
$355
#

^
^
^
^

^
^
^
^

0.9
0.5
0.2
0.1

$366
$309
#
#

1.5
0.6
0.4
0.2

$212
$219
$387
#

 CRS-32
Income quartiles by
dependency status and student type

Independent with dependent
Q1: Less than $29,742
Q2: $29,742 to $52,908
Q3: $52,909 to $80,265
Q4: $80,266 or more

Title IV aid (Pell, Stafford,
PLUS, FSEOG, FWS,
Campus-based aid
Perkins)
(FSEOG, FWS, Perkins)

% of
Total
(33.9%)

%a
2.0
1.6
1.4
1.3

Avg.b
$417
$480
$498
$877

%a
1.0
0.4
0.1
0.2

FSEOG

Avg.b
$286
#
#
#

%a
^
^
^
^

FWS

Avg.b
^
^
^
^

%a
0.4
0.1
0.0
0.0

Perkins Loans
Avg.b

#
#
#
#

Source: U.S. Department of Education, National Center for Education Statistics, 1999-2000 National Postsecondary Student Aid Study (NPSAS: 2000).
a. Percentage of students from row category receiving aid.
b. Average amount of aid received by those students receiving aid.
# = Too small to report.
^ = Not applicable.

%a
0.9
0.4
0.1
0.2

Avg.b
$208
#
#
#

 CRS-33

82
19 -83
83
19 -84
84
19 -85
85
19 -86
86
19 -87
87
19 -88
88
19 -89
89
19 -90
90
19 -91
91
19 -92
92
19 -93
93
19 -94
94
19 -95
95
19 -96
96
19 -97
97
19 -98
19 9899 99
-2
0
20 00
00
20 -01
01
20 -02
02
-0
3

0

Students Served

Avg. Award

Avg. Award (2002 $'s)

Source: U.S. Department of Education. Office of Postsecondary Education. Federal Campus-Based
Programs Data Book 2004.

Table 7. Perkins and FFEL/DL Cohort Default Rates: 1996-2003
Loan type

1996

1997

1998

1999

2000

2001

2002

2003

Perkins

12.57

12.95

12.48

11.54

10.61

9.99

8.35

8.85

FFEL/DL

10.7

10.4

9.6

8.8

6.9

5.6

5.9

5.4

Sources: ED, Federal Campus-Based Programs Data Books, 1996 through 2004; U.S. Department
of Education, Official Cohort Default Rates for Schools, National Student Loan Default Rates.
a. Perkins Loan cohort default rates are for the two-year period ending June 30 of the year indicated.
b. FFEL/DL cohort default rates are for the two-year period ending Sept. 30 of the year indicated.

34

U.S. Department of Education. National Student Loan Default Rates, accessed via the
Internet at [http://www.ed.gov/offices/OSFAP/defaultmanagement/defaultrates.html].
35

Office of Management and Budget, Budget of the United States Government, Fiscal Year
2005 — Appendix, Department of Education, Office of Student Financial Assistance, p. 361.

 CRS-24

Potential Issues for Reauthorization
The HEA, including each of the campus-based programs, may be considered for
reauthorization during the 109th Congress. As it deliberates reauthorization, the
Congress may address a number of issues that have been raised regarding the
campus-based programs and how they are implemented under Title IV of the HEA.
This section identifies and discusses a number of such issues. Two overarching
issues are considered first, followed by several program-specific issues.

Continuation of the Programs
The federal campus-based programs are among the oldest of federal student
financial assistance programs. While they repeatedly have been reauthorized, they
largely have become overshadowed by the other non-campus-based Title IV aid
programs and by higher education tax subsidies. Whether the campus-based
programs are again reauthorized in their current form may be debated by the 109th
Congress. While amending and extending authorization for the campus-based
programs has been proposed (H.R. 507609), the Administration, in its FY2006 Budget
proposal, has called for terminating the Perkins Loan program and for restructuring
the FWS program.
With regard to terminating any of the campus-based programs, the Perkins Loan

Loan program is unique in that when an institution ceases participation in the 
program, or
 if authorization of the program expires, a distribution of assets from 
institutions’
 revolving loan funds is required.3736 Under such a scenario, institutions 
are required
 to repay to the Secretary a portion of the balance of their loan funds that is

is proportional to the amount constituted by FCCs — generally, 75 percent. Thus, upon
often ranging between 85% and
90%.37 Thus, upon termination of the program, the majority of the funds remaining 
in institutions’
 Perkins Loan fund and the majority of funds subsequently repaid on outstanding

outstanding loans would be returned to the federal government. The Administration estimates

estimates that terminating the Perkins Loan program would result in $6.0 billion 
being made
 available for other purposes.38
A general criticism of the campus-based programs is that campus-based
financial aid is not portable and that the availability and amount of aid a student
receives is dependent upon the institution a student attends. This is unlike many
other Title IV aid programs (e.g., Pell Grants and Stafford Loans) in which a
recipient can use federal aid to attend any eligible institution. Another criticism is

36

HEA, Section 466 (20 U.S. C. § 1087ff).

37

U.S. Department of Education, Office of Postsecondary Education, Dear Colleague Letter
CB-00-05, Enclosure 1. Institutions participating in the Perkins Loan program typically
have received FCCs throughout the duration of their participation in the program. From the
inception of the program through the 1992-1993 award year, the federal share was 90%. In
the 1993-1994 award year, the federal share was 70%. Since the 1994-1995 award year the
federal share has been 75%.
38

Office of Management and Budget, Budget of the United States Government, Fiscal Year
2005 — Appendix: Department of Education, Office of Student Financial Assistance, p. 368.

 CRS-25
that the campus-based programs duplicate functions performed by other Title IV aid
programs, particularly with regard to the FSEOG and Perkins Loan programs. For
instance, the FSEOG program serves largely the same population that is served
through Pell Grants. It might be argued that this population could be better served
through expanded Pell Grants. Low-interest loans also might be provided to eligible
students through subsidized Stafford Loans provided under the Federal Family

37
38

HEA, Section 466 (20 U.S. C. § 1087ff).

Office of Management and Budget, Budget of the United States Government, Fiscal Year
2005 — Appendix: Department of Education, Office of Student Financial Assistance, p. 368.

 CRS-34
Education Loan (FFEL) and William D. Ford Direct Loan (DL) programs.39 It also
might be argued that elimination of one or more of the campus-based programs
potentially could simplify the provision of federal postsecondary aid to students.
Finally, the costs of administering the programs may be considered to be high.
Many arguments can be made in favor of continuing the campus-based
programs. The programs share a number of characteristics not present in other
federal financial aid programs and which may be viewed as making them particularly
valuable programs. For instance, they are the only Title IV programs that allow
institutions to establish guidelines (which must be consistent with program
requirements) for packaging federal aid in a way to meet the particular needs of
eligible students. The campus-based programs also allow institutions to transfer
funds between programs and to carry-forward and carry-back funds across award
years. (These two characteristics make the programs popular with participating
institutions.) Because the campus-based programs have matching requirements,
institutional funds are leveraged by federal funds, giving institutions an incentive to
take a proactive role in ensuring that the programs are administered efficiently. The
campus-based programs also support a number of broader societal goals such as
community service under FWS, and public service through Perkins loan
cancellations. Finally, the potential effects of discontinuing the programs are
uncertain.

Campus-Based Funding FormulasProcedures for Allocating Funds to Institutions
The process through which funds are allocated to institutions under each of the
campus-based programs may be considered during HEA reauthorization. While each
of the funding formulas are different and somewhat complex, they share the
similarity of allocating a portion of program funds to institutions based on the
amount of funds each institution received in years past (base guarantee) and a portion
based on each institution’s fair share of unmet student need (fair share increase).
Some have argued that the current funding formulasallocation procedures often provide a
disproportionately larger share of funding to institutions that long have operated
campus-based programs at the expense of institutions that only more recently began
participating in the programs or which expanded their enrollments in recent years.3940
In many instances, institutions with lower allocations are located in rapidly growing
areas. It has been suggested that the funding formulas might be modified to be based
primarily or entirely on each institution’s fair share of unmet student need.40 In the

39

39

Similarities and differences between Perkins Loans and Stafford Loans are discussed in
CRS Report RL32854, Federal Perkins Loans and FFEL/DL Stafford Loans: A Brief
Comparison, by David P. Smole.
40

See for example, Greg Winter, “Rich Colleges Receiving Richest Share of U.S. Aid,” New
York Times, Nov. 9, 2003; and Stephen Burd, “In Some Federal Aid Programs, Not All
Campuses Are Treated Alike,” Chronicle of Higher Education, June 16, 2000.
40

The funding formulas for the campus-based programs last were modified in 1998 when
the programs were reauthorized under P.L. 105-244. Previously, the formulas provided that
if funds remained after awarding institutions their base guarantees, one-quarter of the
remaining funds would be distributed on a pro-rata basis, and three-quarters of such funds
would be distributed according to each institution’s fair share of excess eligible need.

 CRS-35


 CRS-26
areas. It has been suggested that the allocation procedures might be modified to be
based primarily or entirely on each institution’s fair share of unmet student need.41
In the 109th Congress, proposals have been made to accomplish this by gradually phasing

phasing out institutional base guarantees.4142
It is generally acknowledged that funding disparities exist between institutions;
anand a number of ways have been considered as means of reducing these disparities.
In the past, it had been argued that institutions with well-funded campus-based
programs should not be made to bear the costs associated with providing adequate
funding to institutions currently receiving comparatively lower levels of campusbased funding. According to that line of reasoning, if funding for the campus-based
programs were to be significantly increased so that a greater proportion of aid is
provided based on institutions’ fair share of unmet student need, relative differences
in funding levels would decrease without having to change the underlying formulas.42
allocation
procedures.43 Given that in the past several years, there have not been increases in 
funding for the
 campus-based programs sufficient to overcome the funding 
advantages conferred to
 institutions with large base guarantees, current discussion 
has centered on phasing
 out institutional base guarantees over a period of years. This 
discussion is premised
 on the assumption that the allocation of funding according to 
the fair share formulas
 would result in a more equitable distribution of funds to 
institutions.44
As reauthorization of the campus-based programs is considered, it may be useful
to examine how different types of institutions are affected by the current method of
allocating campus-based funding (described earlier). Figure 5 provides a
comparison of the number of institutions that were allocated campus-based funding
for award year 2004-200542005; and of those, the number with a base guarantee larger
than  than
the amount that, hypothetically, would be provided were funds allocated entirely
according to institutions’ fair share of student need. Except for the case of
proprietary institutions receiving FWS funding, more than one-quarter of institutions
of each type had a base guarantee greater than their fair share for each of the campusbased programs. In part due to the base guarantee providing some institutions more
than their fair share, but also due to insufficient funds being allocated to meet each
institution’s fair share, many institutions often are allocated substantially less than
their fair share of program funds.

41

The allocation procedures for the campus-based programs last were modified in 1998
when the programs were reauthorized under P.L. 105-244. Previously, they provided that
if funds remained after awarding institutions their base guarantees, one-quarter of the
remaining funds would be distributed on a pro-rata basis, and three-quarters of such funds
would be distributed according to each institution’s fair share of excess eligible need.
42

H.R. 609

H.R. 507 would phase out base guarantees between FY2008 and FY2016. The
Administration’s Department of Education FY2006 Budget Summary calls for phasing in
revised allocation formulas beginning with FY2006.
4243
44

Stephen Burd, “Unfair Advantage?,” Chronicle of Higher Education, Aug. 15, 2003.

These issues are discussed in more detail in CRS Report RL32775, The Campus-Based
Financial Aid Programs: A Review and Analysis of the Allocation of Funds to Institutions
and the Distribution of Aid to Students, by David P. Smole.

 CRS-27

 CRS-36
Figure 5. Institutions Receiving Campus-Based Program Allotments
and Those with Adjusted Base Guarantees Greater Than Their Fair
Share: Award Year 2004-2005
FSEOG
Public 4-year

540

194

Private 4-year

1160

306

Public 2-year

955

229

Private 2-year

58

155

Proprietary

994

238

FWS
Public 4-year

544

235

Private 4-year

1231

436

Public 2-year

940

206

Private 2-year

49

Proprietary

138
506

57

PERKINS LOANS
Public 4-year

400

176

Private 4-year

776

316

Public 2-year

37

72

28

Private 2-year

18

Proprietary

60

0

116
200

400

600

Institutions Receiving Funding Allocations

800

1000

1200

1400

Institutions w/ Adj. Base Guarantee > Fair Share

Sources: U.S. Department of Education. Office of Postsecondary Education. FISAP data (Feb. 27, 2004); and U.S. Departmetn of Education.
Office of Postsecondary Education. Campus-Based Programs Allocation Data (Apr. 2, 2004).
Notes: Data for Perkins Loans refers only to institutions receiving FCC allocations.
Does not include institutions for which data on institutional need are not available.

Program-Specific Issues
A number of issues specific to particular programs might be deliberated during
the consideration of HEA reauthorization. These are discussed for each program and
might include the following:
FSEOG. Proposals may be made to provide institutions’ financial aid
administrators greater flexibility in the awarding of FSEOGs to students with
financial need. Currently, FSEOGs are required to be awarded first to students with
the lowest EFC, with priority to those who receive Pell Grants. Some suggest that
financial aid administrators should be provided flexibility to award at least a portion
of FSEOGs to students who are among those with the lowest EFCs, but who are not
Pell Grant recipients. It also has been suggested that increased FSEOG funding
would enable institutions to provide more grant aid to students with exceptional
financial need.4345
H.R. 507609 would also amend allocation procedures to allow for 10 percent of
FSEOG funding that is in excess of $700 million to be allocated to four-year
institutions in which more than 50 percent% of Pell Grant recipients graduate within
four  four
years and to two-year institutions in which more than 50 percent% of Pell Grant

43 recipients

45

See for example, the National Association of Student Financial Aid Administrators:
[http://www.nasfaa.org/publications/2003/senaterecs052203.doc].

 CRS-37
recipients 28
graduate within two years. If funds were to be allocated according to such
a  a
provision, it could be viewed as rewarding institutions in which a large proportion
of students with the most financial need graduate in quickly. However, it also could
be viewed as being biased against institutions with large numbers of students enrolled
on a less than full-time basis.
FWS. Reauthorization issues likely will include those related to community
service. Elements of the community service requirements might be modified, such
as by changing the percentage of FWS funds that institutions are required to use to
compensate students employed in community service. In its FY2006 Budget
Justification, the Administration proposed eliminating the 7% community service
requirement and replacing it with a set-aside for community service equal to 20% of
the FWS appropriation. Under this proposal, institutions committed to operating
community service programs would be eligible to receive funds from the set-aside
and would be required to use the funds to compensate students employed in
community service jobs.4446 Alternatively, proposals might be made to increase the
percentage of FWS funds that must be used to compensate students engaged in
community service above the current 7% requirement. As changes to the community
service requirement are considered, it may be worth noting that as shown in Table
6, only 75.0% of institutions reporting the expenditure of FWS funds met both the
requirement to spend 7% of their allotment on community service and the
requirement to operate a tutoring or family literacy program during award year 20022003. (When examined separately, 89.8% of institutions met the 7% expenditure
requirement; and 79.6% met the tutoring and family literacy project requirement.)
Proposals also might include changing or clarifying the types of activities that
are considered community service. For instance, currently, FWS employment in an
on-campus daycare facility that is open only to campus employees, but not the
general public, is not considered community service. Under H.R. 507609, work in oncampus child care services would be counted as community service regardless of
whether or not the child care program served the larger community. Proposals also
might be made to amend the procedures through which institutions are held
accountable for their community service requirements, such as by changing the
conditions under which institutions might be granted waivers from these
requirements or by imposing explicit sanctions on institutions for failing to meet
these requirements.
Perkins Loans. A range of issues is likely to emerge regarding Perkins
Loans. For instance, proposals have been made to raise annual or aggregate loan
limits (H.R. 507609). Currently, the average value of a Perkins loan is significantly
below current loan limits, however, some suggest that by increasing loan limits, the
borrowing needs of eligible students might be able to be met under a single loan
program, rather than multiple programs (i.e., Stafford and PLUS) as is often the
case.4547 In addition, it has been suggested that the terms and conditions of Perkins
loans should be made more similar to those of other Title IV programs in instances
44
4546
47

U.S. Department of Education, Fiscal Year 2006 Budget Summary, p. 55.

See, for example, the National Association of Student Financial Aid Administrators,
[http://www.nasfaa.org/publications/2002/grtfperkins090302.html].

 CRS-3829
where these might be more favorable to the borrower, such as when borrowers are
seeking forbearance or regaining eligibility after default.4648
Effective July 1, 2004, the variable interest rate on Stafford Loans (3.37%
during repayment, and 2.77% for in-school, grace, and deferment periods), and PLUS
Loans (4.17%), dropped to a level that is lower than the rate for Perkins loans (5.0%
during repayment). In this time of low interest rates, some might question whether
borrowers of Perkins Loans should be faced with an interest rate that is higher than
that available under Stafford or PLUS Loans. Others might point out that Perkins
Loans contain conditions favorable to borrowers, some of which are not available
with Stafford and PLUS Loans, including that Perkins Loans have no borrower fees,
the provision that no interest accrues on Perkins Loans while borrowers are in-school
and during grace and deferment periods,4749 that Perkins Loans carry a fixed interest
rate, and that Perkins Loan interest rates may be reduced to 4.0% under incentive
repayment programs. Still, if a borrower consolidates a Perkins Loan, these benefits
may be lost.
As previously discussed, an additional benefit provided by Perkins Loans is that
borrowers may be granted cancellation of Perkins Loans (and concurrent deferment)
for many types of public service. Included among these types of public service is
service as a law enforcement officer or corrections officer. ED has determined that
this includes service as a prosecuting attorney, but not as a public defender.
Proposals have been made to authorize student loan cancellations (including Perkins
Loans) for service as a public defender (H.R. 198). Some might suggest that Perkins
Loan cancellations be made available for types of public service beyond those already
provided for, such as for police, fire, and rescue workers; or for service in national
security, for example as a critical foreign language specialist or cultural expert.4850
Issues involving federal funding for the Perkins Loan program also might be
considered. Some might question whether the federal government should continue
to make FCCs to institutions’ revolving loan funds, or if institutions might be able
to continue operating the program solely by making new loans capitalized by the
repayment of previously made loans. Others have called for the federal government
to devote more resources toward keeping current on reimbursements for Perkins
Loan cancellations.4951 For FY2005, no funds were appropriated for Perkins Loan
FCCs. Suggestions also have ben made to allow institutions that cease participating
in the Perkins Loan program to be able to continue collecting repayments on
outstanding loans and to be permitted to transfer these funds to the FSEOG or FWS

4648

Ibid.

4749

In the case of subsidized Stafford Loans, the government pays the interest that accrues
while students are in-school, and during grace and deferment periods. For further
information on the terms and conditions of Stafford and PLUS Loans, see CRS Report
RL30655, Federal Student Loans: Terms and Conditions for Borrowers, by Adam Stoll.
4850

For examples of bills previously introduced to accomplish such purposes, see H.R. 2522,
H.R. 2476, S. 486, and S. 1112 — 107th Congress; and S. 407 — 108th Congress.
4951

The Student Aid Alliance suggests that for FY2003, Perkins Loan reimbursements should
be increased to $100 million to fully reimburse institutions for Perkins Loan cancellations.

 CRS-3930
programs rather than being required to assign their Perkins Loan portfolios to ED for
collection and to liquidate their Perkins Loan funds.5052
Finally, Perkins Loan cohort default rates might be reexamined more closely,
to include their use as an accountability tool. Perkins Loan cohort default rates
potentially are affected by a range of factors to include the mix of financial aid types
that students receive. For instance, research has found that average Perkins Loan
amounts are small relative to overall student financial need.5153 As a result, Perkins
Loan borrowers often have to receive Stafford Loans to meet their expenses. Thus,
Perkins Loan borrowers often have a higher debt burden, in addition to having less
financial resources than non-Perkins Loan borrowers. In addition, the types of
institutions most adversely affected by cohort default rate penalties are two-year
institutions and proprietary schools, which often serve proportionately larger numbers
of low-income students than four-year institutions

50.

52

See, for example, the National Association of Student Financial Aid Administrators,
[http://www.nasfaa.org/publications/2003/senaterecs052203.doc].
5153

Kenneth E. Redd, Is There Still A Need for Perkins Loans? Differences in the
Demographic Characteristics and Income Levels of Perkins and Stafford Loan Borrowers,
(Sallie Mae Education Institute, Jan. 1999), p. 15.

 