After months of wrangling, Senate lawmakers struck a deal Tuesday to revive the Federal Perkins Loan Program for needy college students. But the agreement to extend the program for two years comes with restrictions that could ultimately limit its effectiveness.

It’s been nearly three months since colleges lost the authority to make new Perkins loans. Despite a bipartisan coalition in Congress to extend the authority for at least another year, the objection of Sen. Lamar Alexander (R-Tenn.), chair of the Senate Health, Education, Labor and Pensions Committee, derailed the campaign.

To get Alexander on board, supporters agreed to eliminate eligibility for new graduate students in the 2016-2017 academic year. Students would also have to hit the borrowing limit on federal Stafford loans before they can be awarded a Perkins loan. The changes are meant to cover the cost of continuing the program, but could make it more expensive for lower income students to borrow.

Perkins loans carry a 5 percent interest rate and are subsidized, meaning the government pays the interest while the student is in school. Although the interest rate on Stafford loans have been below 5 percent for the last few years, there’s no guarantee they will stay that low. The government resets rates on student loans every year based on the Treasury Department’s auction of 10-year notes, plus a fixed margin. That means the rate can go up, though never higher than 8.25 percent on undergraduate loans.

If it were up to Alexander, all of the federal loan programs would be consolidated into one unsubsidized loan. The issue is likely to surface during the upcoming reauthorization of the Higher Education Act.

An Alexander aide said the tentative deal on Perkins “closes down the program in a responsible way, while Congress can work together to find a long-term solution for students that makes it simpler and easier to apply for aid and afford college.”

The two-year extension bill could be taken up as early as Wednesday.

Perkins can be a critical lifeline for students who hit the borrowing limit on federal Stafford loans. Without Perkins, they would have to take out a private student loan, which do not offer the same consumer protections or benefits as federal loans.

Students currently enrolled in college who received a Perkins loan before June 30 are still able to take out another for up to five years. About 540,000 students received Perkins loans, averaging about $2,172, for the 2013-14 academic year, according the U.S. Department of Education.

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