Several prominent universities, such as George Washington University, University of Pennsylvania and Yale University, are suing former students for defaulting on Perkins student loan repayments, according to the financial news site Bloomberg.

While the majority of student loans are provided through the federal government, Perkins loans are administered by college institutions themselves and repayment directly funds further propagation of the loans. According to Bloomberg, the amount of Perkins loans defaulted on reached an annual total of $964 million in the 2010-11 school year, a roughly 20 percent increase from the amount recorded five years before.

President Obama recently proposed an increase in funding to the Perkins loan program from roughly $1 billion to $8.5 billion and a restructuring of the system that would shift the responsibility of administering the loans to the Dept. of Education rather than individual schools.

Erick McCurdy, manager of UCSB Billing Accounts Receivable Collections (BARC) Systems & Operations, said while universities must follow certain uniform guidelines regarding the Perkins loans program, it is up to each school’s administration to decide the best way to enforce policies.

“The rules are defined by the legislature. Other than that, there’s the freedom to interpret what we should or should not do,” McCurdy said. “The university is always there to interpret broadly in the student’s favor.”

So far, the UC system has yet to encounter many problems regarding Perkins loan repayments, according to UCSB Director of Financial Aid and Scholarship Mike Miller. Miller said he is confident in the efficiency of the Perkins loan repayment system implemented at UCSB.

“We are very fortunate at the University of California — systemwide, but specifically at UCSB — that a very low percentage of our students go into default,” Miller said. “I think a big part of that is because UCSB students leave with manageable amounts of debt compared to institutions across the country.”

Miller said the Perkins loan program is often a popular choice because its more lenient restrictions give students time to find a job upon graduation before they are asked to repay the loans.

“The Perkins loan program is nice because it has a nine-month grace period,” Miller said. “So after a student graduates, they have nine months to get out and find employment and get settled before they start making payments.”

Because the Perkins program is somewhat of a revolving fund, Miller said, the main issue with students defaulting is that future students suffer. Additionally, the UC system has a finite amount of loans to provide through the Perkins system, and if that money is not repaid, the loans cannot be passed on to future students.

A version of this article appeared on page 4 of February 13th, 2013’s print edition of the Nexus.