De Anza Perkins Loan borrowers have been notified that the winter and spring 2008 disbursements have been canceled. There is no disbursement for the summer quarter. Students will not receive money from the Perkins Loan Program until next fall.

“I don’t know what happened this year, but it’s really bad. This is the second time in my nineteen years at De Anza that this has happened. The first time, ten years ago, we only had to cut the spring disbursement. This year we have to cut the winter and the spring,” said Nicholas Huynh, an official in charge of Perkins Loans and Pell Grants.

According to the letter sent out to Perkins Loan borrowers, since July 07, repayments are down 43 percent.

Cindy Castillo, the Director of Financial Aid and Scholarships at De Anza College, said, “The Perkins Loan is a sort of revolving account. The government does not give us any money for the Perkins Program. The money that is being repaid from former borrowers revolves back to the new barrowers. I’ve been here thirty years and what we do is look at the collections from last year, take a conservative estimate of the total repayment for this year, and then project how much we’ll have. Then we award based on that projection.”

Castillo said that previous borrowers were attempting to pay. She said that many checks received could not be used, because the account holders simply did not have the money in their checking accounts.

Huynh said that students had contacted the Financial Aid Department worried that they were not on the wait list for disbursements and seeking further explanation of the circumstances.

Castillo said that there is no way to know why a group of borrowers are acting a certain way at a particular time.

She said that she could only speculate why borrowers were not repaying. “People go into repayment at different times,” said Castillo. “Students could go into repayment years from now if they stay in school, get their PhD. We could not see a repayment for up to ten years.”

Perkins Loans do not accrue interest until after the student exits college for six months. Because borrowers went into repayment at different times, it was impossible to know for sure whether the recent housing bust was the reason borrowers weren’t repaying.

Financial Aid officers are telling students relying on Perkins money to pull Stafford loans, or if they already have Stafford Loans, to increase the amount they are borrowing.

Concerning a student facing financial hardship, Huynh said “I replied to her and urged her that if it’s not enough for her, to keep her in school, that she must go ahead and see Joe Ngo, for a Stafford Loan. If she already applied for a Stafford then she should consider an alternative loan.”