Perkins loans, which provide a low-interest source of income for more than 1,000 University students, would be eliminated entirely during the next 10 years under President George W. Bush’s proposed budget.

The program, which started in the 1950s, provides undergraduate students with loans of up to $4,000 per year and graduate students with up to $6,000 per year. Last year, 1,557 University students received approximately $2.5 million through the Perkins loans, said Daniel Mann, director of financial aid.

The funds from the current Perkins Loan program would be shifted to the Pell Grant program, which has a budget shortfall of $4.3 billion. Last month, President Bush announced that he would try to increase the maximum Pell Grant award by $100 per year for the next five years to $4,550.

“The University is fully supportive of the Pell Grant program,” Mann said. “Yet, it should not take away from the Perkins loans.”

If passed, students would continue to receive Perkins Loans through next year, Mann said.

If Perkins loans are eliminated, the University would provide other options to compensate students for the loss – such as jobs, institutional loans or scholarships, Mann said.

“I hope it doesn’t come down to all financial aid being eliminated,” he said. “It would force low- and middle-income families to look at cheaper options such as community colleges. The University would prefer for this not to occur.”

President Bush’s budget proposal now goes before Congress for approval. In the past, several presidents have tried to eliminate the Perkins loan program, but all such attempts have not been approved, said William Ehrich, associate director of financial aid at Indiana University-Bloomington.

“In fact, the only president who ever liked the Perkins loan (program) was the man who started it, Dwight Eisenhower, in 1958,” Ehrich said.

Mann and several other Big Ten financial directors said that this latest threat to the program would also fail.

“We think it’s a bad idea, but to be honest, I think the plan is dead in the water because there is a lot of opposition in Congress, even from Republicans like Rep. John Boehner (R-Ohio),” said Steve Van-Ess, director of financial aid at the University of Wisconsin-Madison, referring to the House Education Committee chairman. “I don’t think it will slide because there are too many students disadvantaged by the proposal.”

“We will still be able to serve almost as many students next year as we do currently with Perkins loans,” Mann said. “The University plans on contacting legislators and telling them the program must be saved because many students depend on it.”

If the proposal passes, many University students who depend on the Perkins loans could face negative consequences.

“I would have to take out private loans, which are more expensive to pay back, or I would have to live with my parents and attend a commuter school,” said Janet Strain, senior in LAS. “I think we need more financial aid, not less. Considering a college degree is now equal to a high school degree, I need to attend graduate school so I’m going to be dependent on loans for the next four years.”

While the University would lose $2.5 million, other Big Ten schools would be hit even harder if the program is scrapped.

The University of Iowa received more than $4 million from the program last year, according to Mark Warner, director of financial aid at the University of Iowa.

Van-Ess said Wisconsin students received more than $10 million last year.

Warner echoed Mann’s comments that the money should not be taken away from the Perkins Loan to rescue the Pell Grant program.

“We’ll never get in Pell Grants what we get in Perkins loans – there’s just no way to counteract $17 million,” said Pamela Fowler, director of financial aid at the University of Michigan, referring to the amount of Perkins loan money given to Michigan students last year.

“It just doesn’t seem quite logical to take away from one financial aid program to fund another,” said Ralph Hosterman, director of financial aid at Penn State University. “It’s a short-term solution for a long-time problem.”

Hosterman said if the proposal passes, there is nothing to compensate for the loss of the Perkins Loan program.

“Low-income students will take the brunt of this decision because they won’t be able to afford it,” Hosterman said.