There are few higher education access issues the proposed reforms to the Perkins Loan Program (pages 64 to 88) aren’t trying to target. Tamping down excessive college costs? Schools get rewarded for low tuition. Need to improve graduation rates for low-income students? Institutions receive money for graduating large numbers of Pell Grant students. But the proposed Perkins loan reforms do ignore one access problem: the usage of expensive private student loans instead of cheaper federal options. Fortunately, there are two simple ways Congress could better connect Perkins loans with their private counterparts.

Perkins loans are a good vehicle for reducing private loan borrowing. In fact, the Obama administration’s initial unveiling of the proposal suggested as such. Students that have exhausted their federal student loans but still need extra assistance could take out a Perkins loans, which carries a 5 percent fixed interest rate—well below the variable rate on private loans that can easily exceed 12 percent. Perkins loans are also eligible for If consolidated, Perkins loans also become eligible for income-based repayment, public service loan forgiveness, and other benefits designed to lessen debt burdens.

But while using Perkins loans to reduce private student loan borrowing makes good policy sense, the version of the program put forth in the U.S. House of Representatives falls short of this objective. Instead, Perkins money will be allocated to schools based on three formulas, each of which creates slightly different incentives. The largest is the self-help need amount, which would distribute $3 billion to schools based upon the gaps between the cost of attendance and expected family contribution of their students—benefiting high-cost institutions. An additional $1.5 billion would be awarded to schools with tuition and fees below their sector average or with large amounts of non-federal need-based aid. The final $1.5 billion is given to schools based upon the number of their graduates that received a Pell Grant.

These formulas are already so complicated and varying that including private loans would be too much. But there are two easy ways Congress could better link Perkins and private loans without requiring any confusing calculations.

Talk it out

Large numbers of private loan borrowers do not exhaust their federal student loan eligibility before turning to the more expensive debt. But there are proven ways schools could encourage borrowers to take out lower cost federal loans before turning to the private market. For example, Barnard College requires students to have a conversation about exhausting federal loan eligibility before the school will certify that a student applying for a private loan is enrolled. As a result of this program, private loan borrowing at Barnard decreased by 73 percent in a single year.

Congress should implement a similar conversation requirement as part of the Perkins loan reforms. Any school getting money from the retooled program would be required to set up a borrower education program that in some way aims to inform students about additional federal options—including a Perkins loan if the school decides to offer one to the student. Schools would get leeway in designing their programs, allowing for significant creativity and the sharing of best practices. The requirement would also not interfere with the distribution of Perkins loan funds and could be financed with some of the money set aside for administrative expenses.

Report certifications

The federal government currently collects little to no data on private student loans. The Perkins loan program represents an opportunity to change that by taking advantage of a new form required by borrowers taking out a private student loan. This self certification form was created as part of the 2008 Higher Education Opportunity Act. All borrowers wishing to take out a private student loan must fill out one of these forms, which include information on the types of alternative aid available. Students can obtain the form from either their lender or financial aid office and have the option of returning it to either party.

The self certification form is certainly flawed, but it also represents a chance to get a better sense of private loan borrowing. To do this, Congress could require that all institutions receiving Perkins loans must report the number of self certification form requests they receive each year. An added requirement that this data be recorded on a per-student basis in the National Student Loan Data System would also make it possible to get a better picture of how many private loan borrowers are not first exhausting federal options. Reports of certification requests could also be compared to Perkins loan borrowing to see if the latter has any effect on the former.

Requiring schools to report self certification forms would certainly miss many borrowers that get the form straight from their lenders. One way to bolster this problem would be to also force schools to report the numbers of any enrollment certification requests they receive from private lenders on behalf of students. Alternatively, self certification regulations could be altered to require that the form come from the financial aid office—an initial stipulation that was eliminated by the regulations put out by the Federal Reserve Board.

Jack of all trades, master of none

The proposed Perkins loan reforms try to solve almost every access problem faced by today’s higher education students. But this is not a silver bullet, and taking on too much is likely to result in a bunch of challenges being tackled in a mediocre manner. But rather than getting bogged down in complicated equations, these small modifications could go a long way in linking Perkins loans to tamping down the dangerous world of private student loan borrowing.

UPDATED: The Institute for College Access and Success pointed out that Perkins loans are only eligible for income-based repayment or public service loan forgiveness if they are first consolidated. This existing requirement makes sense because Perkins loans are currently serviced by the borrower’s school. New Perkins loans, however, would be serviced by the companies selected by the U.S. Department of Education, so an argument could be made for removing the consolidation requirement.