College Had Huge Drop in Perkins Loan Funds Awarded

Posted on 16. Nov, 2011 by admin in Student Loan News

Nov. 15–NORTH ANDOVER (Source: By Alex Bloom, The Eagle-Tribune, North Andover, Mass.) - In the 2006-2007 school year, Merrimack College handed out nearly $ 1.3 million in federal Perkins Loan funds to 357 students. The next year, the number of loans handed out dropped to just one loan, for $ 2,750.

Those two years of Perkins Loan funding are at the tail end of a U.S. Department of Education investigation into Merrimack’s handling of the Perkins Loan program between 2002 and 2007.

Merrimack College president Christopher Hopey revealed scant details about the investigation in a Nov. 7 letter sent to alumni, students and staff. The letter states that the college found issues within the Perkins Loan program in its most recent year-end review and that the U.S. Department of Education is looking into “mismanagement,” noting that “past practices are not adequate and in need of significant correction.”

“We’re not going to comment in the middle of a review here and we’re certainly not going to do it while the (U.S. Department of Education) is going through their own investigation,” said Jeff Doggett, the chief of staff to Hopey.

Mark Kantrowitz, publisher of two college guide websites, said the disparity in Perkins Loan funds awarded between the two school years is out of place because Perkins is a revolving loan program. As more loans are paid back, the funds are then awarded out to new students.

The drop in funds awarded, Kantrowitz said, would mean the college had absolutely no money paid back, or that they did not record collections properly and then could not send out funds.

“It definitely seems strange,” said Kantrowitz, who publishes the websites Fastweb and FinAid.

Christine Mordach, the college’s previous Director of Financial Aid had no comment when reached at her Methuen home yesterday. Doggett would not comment on Mordach’s status with the college.

Hopey’s letter stated that the college would be putting in place “a new team of seasoned professionals” to handle financial aid, and Merrimack College’s website lists Charlene Ervin as the interim director of financial aid.

Mordach, listed as recently as June as the college’s financial aid director, is no longer listed on the college’s website.

Investigators are focusing on a five-year period ending in 2007 during the presidency of Richard Santagati, who retired three years ago. Santagati presided over the Catholic college for 14 years.

Santagati said on Saturday that he didn’t know anything about the probe. He said it sounded like it could be a bookkeeping question.

Hopey took over as president in July 2010 and said in his letter that the Perkins Loan program mismanagement issues were discovered in “our FY 2011 year-end review.”

Nationally, previous student loan scandals in the past have included financial aid officers receiving benefits and perks for directing students to preferred banking institutions — including one that resulted in the 2007 firing of a Columbia University official.

Kantrowitz said that student loan scandals rarely involved the Federal Perkins Loan Program, partly because it’s a small program. About 1,800 institutions give out about $ 1 billion in total loan funds compared to about $ 100 billion in federal Stafford and PLUS loans originated through Direct Loans.

The Perkins interest rate is locked in at 5 percent and the federal government subsidizes the loan, ensuring that interest doesn’t accumulate until after a student graduates.

The loans provide up to $ 5,500 per year for undergraduates per year and up to $ 8,000 a year for graduate students. Current annual tuition and room and board at Merrimack totals $ 44,125.

The college has established a special hotline (1-800-210-8695) that current students, parents and alumni can call if they have questions or concerns about their financial aid accounts being affected. Doggett would not say what information the college is providing through the hotline.

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PERKINS LOANS AT MERRIMACK

Federal Student Aid, an office of the U.S. Department of Education, compiles numbers on student aid given out by different colleges, including Merrimack College. Data available yesterday only streches back to 2006-2007 — the final year reportedly under investigation by the U.S. Department of Education.

YearPerkins Recipients Total Perkins funds

2009-2010130 $ 350,136

2008-200930 $ 94,855

2007-20081 $ 2,750

2006-2007357$ 1,289,050

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(c)2011 The Eagle-Tribune (North Andover, Mass.)

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A service of YellowBrix, Inc. Publication date: 2011-11-15

Source: By Alex Bloom, The Eagle-Tribune, North Andover, Mass.

Tags: college loans, loan consolidation, student consolidation programs, student loan, student loan consolidation reviews, student loan consolidation programs

Tags: Awarded, College, Drop, Funds, Huge, Loan, Perkins