The Perkins Loan is a Federal college loan that is guaranteed by the government. It is disbursed through the college a student will be attending. The Perkins Loan is federal financial aid instrument based on serious financial need. It has a low interest and a longer repayment period.
Compared to other federal loans such as the unsubsidized and subsidized Stafford Loans, there are fewer Perkins loans given out each year. In order to successfully receive a Perkins Loan, a student is advised to apply early to their college of choice and to complete their financial aid application package very early. A student must also demonstrate serious financial need.
The Perkins Loan Process
The United States federal government sends money to colleges and universities to distribute to students as part of their financial aid package including Perkins Loans. The college to which you are accepted will use the results of your FAFSA application to determine if you qualify for the Perkins Loan and how much you should be given. The loan is given out based on strong financial need and also on a first in, first served basis so students are advised to send in their FAFSA application very early. Generally a student who has been given a Pell Grant is a prime candidate to receive a Perkins Loan.
How to apply for the Federal Perkins Loan
There is no separate application for the Perkins Loan. The FAFSA is the standard application just like any federal loan or grant. The FAFSA is a very important application and students should always file it before the deadline. If you fail to do this, you are eliminating yourself from receive any form of federal aid (loans, grants and scholarships) and even some financial aid packages from your college that is not provided by the government. The FAFSA can be filed online. You can also print it out and send it via snail mail.It is also available in Spanish.
The answers you provide on your FAFSA will determine your eligibility for all federal financial aid packages including loans. It also determines how much in each type of aid you will receive. A student must submit a new application each academic year.
The Perkin Loan does not require a credit check so don’t let bad credit or no credit discourage you. You can even use the repayment to build or repair your credit.
How much can I receive?
There is really no fixed limit on how much money can be given to a student under the Perkins Loan. This depends largely on how much funds was given to the school for distribution under the Perkins Loan scheme. Colleges have the freedom to give out funds to those who qualify until the funds are exhausted. To improve your chances of receiving the amount you need, apply early for college admission and also file your FAFSA early.
But generally, an undergraduate student should expect to receive up to $4,000 and up to $6,000 for graduate students.
Repayment Terms for the Perkins Loan
The interest rate on the Perkins Loan is 5%. Students have a 9 months grace period. If you are enrolled at least half-term in college, you will not pay any interest whiles you are in school and will only start making payments after you graduate. Students have approximately 10 years to pay back their loan.
The repayment service will most likely be handled by a student loan servicing company. They usually enter into agreements with colleges and universities to provide manage student loans for them.
What do do if you are at risk of defaulting.
A lot of graduates find it difficult to properly maintain their payment schedules. For one reason or another, a student may be on the verge of default or even personal bankruptcy. Before you default, you should consider some of the other repayment options that may be available to you.
- Sometimes a graduate may find it difficult to continue their monthly payments for a short time. This may be due to an illness, a sudden loss of job or other short term problem. When this happen, some student loan servicing companies will give you the chance to apply for a loan hardship deferment. This will defer your loan repayment for up to six months.
- Another option is the federal loan consolidation program. This applies to students who have other federal loans in addition to the Perkins Loan.
The loan consolidation option combines your different loans into one loan. You will therefore make just one monthly payment instead of multiple monthly payments. This option will also extend the repayment period by up to 30 years. This will mean lower monthly payments although you will end up paying much higher than you initially borrowed.
Student Teachers and the Perkins Loan Cancellation.
Students who become teachers can have their Perkins Loan cancelled. All you have to do is agree to work as a full time teacher in a critical need area after graduating from college. The federal government maintains strict guidelines for defining a full time teacher and a “critical need area.”
To get your loan fully cancelled, you will have to work full time for 5 years under the approved guidelines. If you work for two years full time, 30% of your loan will be cancelled. Work four years and 70% of your loan will be cancelled as long as you worked under the approved criteria.