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What is a Federal Perkins Loan

A Federal Perkins Loan is a low-interest loan for both undergraduate and graduate students. The interest rate for a Perkins loan is 5%. Your school is the lender. The loan is made with government funds, and your school contributes a share. Repay Perkins loans to your school.

Other than interest, is there any charge to take out loans

No, there are no fees to take out loans. If you skip a payment, make a late payment, or make less than a full payment, you will be charged a fee. If you continuously avoid payments, you will pay collection costs on top of your fees.

How will I be paid

Your school will either pay you directly by check, or credit your account. You will receive the loan in at least two payments throughout the academic year.

Can I cancel the loan if I change my mind, even if I’ve signed the promissory note agreeing to the loan’s terms

Yes. Your school must notify you in writing whenever your account is credited. Your school has to notify you no earlier than 30 days before, and no later than 30 days after your account is credited. You can cancel all or a portion of your loan within 14 days after you’ve received the notification, or by the first day of the payment period (whichever is later). To refuse funds made directly by check, return the check.

When do I pay back this loan

If you’re attending school at least half time, you have a nine month grace period before you have to pay. The grace period begins right after you graduate, leave school, or are enrolled less than half time. Those who are active duty in the military, check if you are eligible for a longer grace period. If you’re enrolled less than half time, check with your financial aid administrator about your grace period. At the end of your grace period, you must begin repaying your loan. You are allowed up to 10 years to pay off your loans.

The U.S. Department of Education (ED) has issued special guidance for those called to active duty as a result of the September 11, 2001 terrorist attacks. If a borrower’s loans are in an in-school status, in-school deferment status, or in a grace period when the borrower is ordered to active duty or reassigned, the loan holder must maintain the loans in that status during the period of the borrower’s active duty service or reassignment, plus the time necessary for the borrower to resume enrollment in the next regular enrollment period reasonably available to the borrower. The maintenance of loan status cannot exceed a total of three years, including the period of time necessary for the borrower to resume enrollment.

For a borrower whose loans are in repayment, the loan holder must grant a forbearance (temporary suspension of repayment) for the expected period of the borrower’s active duty status, beginning on the first day of active duty, not to exceed one year. Forbearance beyond the initial period will require supporting documentation and a written agreement by the borrower.

For more information about loan repayment options that might be available to a borrower in this situation, the loan holder should be contacted directly.

How much will I have to repay each month

Your monthly payment amount will depend on the size of your debt and the length of your repayment period. The table below shows typical monthly payments and total interest charges for three different 5-percent loans over a 10-year period payday loans buffalo ny

Examples of Typical Payments for Perkins Loan Repayment

Federal Perkins Loan Program

Perkins Cancellation CHAPTER 5 - Federal Student Aid

Perkins Loans are federally guaranteed student borrowing options that are administered jointly by the U.S. government and individual colleges and universities.  The low-interest, long-term loans target students with serious financial hardship.

A lion’s share of federal financial aid originates from the Pell Grant and William D. Ford Federal Direct Loan programs.  Select economically disadvantaged students are eligible for additional student aid designed to increase college access for society’s neediest groups.  Perkins Loans fill important funding roles for students who qualify; but the pool of aid isn’t bottomless.   If you have your eye on Perkins financing, the keys to winning a loan are filing early and meeting federal financial aid eligibility requirements.

Getting a Perkins Loan:

The Federal Government metes out funds directly to colleges and universities for some campus-based aid programs; including Perkins Loans. Individual colleges evaluate your financial aid needs based on information you submit to the government.  Financial aid administrators match-up your college funding requirements with whatever grants, scholarships and loans are available to tackle your bills.  If your ability to pay for school is significanly hindered by your economic background, Perkins loans bridge the affordability gap that remains after all other forms of financial aid are exhausted.

Families with annual incomes below $25,000 usually qualify for Perkins Loans. And If you qualify for a Pell Grant, which is also awarded based on financial need, then you are probably also a priority candidate for a Perkins Loan.  Your Perkins pursuit begins by submitting a standardized federal financial aid request.

Apply Online Using the FAFSA Form

The Free Application for Federal Student Aid (FAFSA) provides the only path to federal financial aid; including Perkins Loans.  The application gathers data about your family and finances.  Income, assets, number of familiy members and other relevant points are compiled to create a comprehensive snapshot of your family’s ability to contribute to your higher education expenses.

Federal FAFSA filing deadline is June 30th, but individual states and campuses impose their own unique filing requirements.  The application can be filed any time after January 1st, so students who are counting on federal aid; especially Perkins Loans, are encouraged to file as early as possible. Spanish-speaking students apply here.

A small percentage of FAFSA applicants are required to submit additional documentation or clarify application entries, but once your financial information is in place, an individual Student Aid Report (SAR) is generated.  The form is used by individual institutions of higher learning to evaluate your college funding outlook, and contains vital determinations like your Expected Family Contribution (EFC).  Considering family income limitations and the number of siblings you have that are also attending college, your EFC represents a baseline contribution that falls within your means.

When you submit your FAFSA, be prepared to identify your potential college destinations.  Each designated school receives a copy of your SAR, allowing them to craft custom financial aid packages that tap their own campus-based programs.  Formal offer letters from university financial aid offices break down the types of assistance the college is extending to you. To remain eligible for Perkins Loans and other federal student aid, resubmit current FAFSA data annually.

Perkins Loan Limits

For limited-credit college students, federal loans present attractive borrowing options, because Perkins and other government loans are not dispensed based on credit worthiness.  Regardless of your credit history , you may be approved for Perkins loans. Repaying your Perkins Loan on time actually helps you build credit, so responsible borrowing for education should not be under-utilized.

The school you attend becomes your Perkins lender, and not all universities participate in the program. Although the country is dotted with over 1,700 participating institutions of higher education, it is important to consult individual campus financial aid offices for specific program information.  The amount of funding available at any given school is strictly based on the financial resources in that particular college’s Perkins account.  Unfortunately, due to limited funding, some students who qualify for Perkins Loans do not receive them. Your best strategy for winning Perkins Loans: apply early for admission to your college and submit your FAFSA well before the filing deadline.

Needy undergraduate students may qualify for up to $5,500 in Perkins loans each year; with a cumulative maximum borrowing limit of $27,500, over the course of a student’s college career.

Graduate students qualify for up to $8000 annually, with a lifetime borrowing threshold of $60,000.

Repaying a Perkins Loan

Perkins Loans are packaged with a 5% interest rate and a 9-month grace period.  As long as you are enrolled in college at least half time, your loan interest does not accumulate.  You must begin repayment within 9 months of leaving school, or risk default.  Average Perkins Loan  repayment schedules are approximately 10 years, barring any loan deferments.

Your Perkins Loan promissory note binds you to the contract, so failing to follow through with scheduled payments has devastating credit consequences.  Your loan may be administered by a student loan servicing company. Companies like these enter into contracts with colleges and universities to provide financial support for campus-based student loan programs.

Don’t Default on Your Perkins Loan

Given the average student loan debt level across the country,  it is not surprising  that many lenders automatically offer alternative repayment options for student loan clients who are at risk for loan default or personal bankruptcy.  Tackle repayment difficulties before they snowball into credit catastrophes.  Once you are in default, it is hard to mitigate damage to your credit record.

Consider these repayment approaches and credit-saving strategies that might be at your disposal:

Student Teachers: Get Your Perkins Loan Cancelled

If you are a student teacher receiving a Federal Perkins Loan, you may qualify for partial or full loan cancellation when you agree to work full-time in a critical need teaching capacity. Qualified teacher shortages are addresses with generous educational aid programs that allow teaching students to trade service for funding.  Certain requirements must be met to take advantage of the Perkins Loan cancellation for teachers option, and strict parameters define “full-time teachers” and “critical need areas.”

Participants earn loan offsets that are commensurate with the number of years they teach at high need schools.  Teachers who commit for two years enjoy 15%  loan cancellation rates for each year of service.  An additional 2-year stint earns another 20% cancelation for each year, and a final, fifth year commitment closes the books on the loan by cancelling the remaining 30% loaning money to a friend

Federal Perkins Loan UA Office of Scholarships and .

The federal government discontinued the Perkins Loan Program on Sept. 30, 2017 in a continuing attempt to streamline its ever-growing and inefficient system of funding college education.

The end of the Perkins Loans, a need-based program aimed at students from low-income families, came despite calls from both Democrat and Republican senators to extend it through 2019. That call was silenced on the Senate floor by Lamar Alexander, a Republican from Tennessee.

“It is time for our country … to move on to a simplified student aid program, that has only one federal loan for students, one federal grant for students and one work-study program for students,” Alexander said.

The Perkins Loan used $1.2 billion in funds for more than 500,000 students. It was set to expire in 2015, but was reauthorized by Congress for two more years.

It’s possible – though not probable – that it could be reauthorized again sometime in the future.

Perkins loans are federal student loans offered to undergraduate and graduate students with exceptional financial need. They are always subsidized, meaning you won’t pay or accrue any interest while you are in school or during the nine-month grace period following graduation. After that, your loans have a fixed interest rate of 5 percent and are typically repaid over a period of 10 years.

Perkins loans began as National Defense Student Loans (NDSLs) in the 1950s and were originally available only to financially needy students planning to study mathematics, engineering or a modern foreign language, or who wished to teach.

Today, Perkins loans are for higher amounts and have more favorable forgiveness requirements. They are available to all financially needy students and are not exclusively offered to students in certain areas of study.

Perkins Loan Forgiveness

Because Perkins loans are available only for the financially neediest students, these loans have the most opportunities for loan forgiveness. If you fit the criteria for loan forgiveness, all or part of your debt is cleared.

Your Perkins loans may be partially or completely forgiven if you go into one of the following lines of work:

Perkins Loan Limits

Students are only allowed to borrow a certain amount in Perkins loans per year. As an undergraduate student, you may not borrow more than $5,500 per year, for a total of $27,500. If you’re a graduate student, you cannot borrow more than $8,000 per year. You cannot borrow more than $60,000 in both undergraduate and graduate Perkins loans combined.

Perkins loans are backed with government money but are distributed by individual colleges and universities. Your maximum loan amount is dependent upon the availability of the loan at your school. This means that even if you are eligible for Perkins loans, there is no guarantee that you’ll be able to borrow the maximum amount each year.

Applying for a Perkins Loan

To apply for a Perkins loan, complete a Free Application for Federal Student Aid (FAFSA). By completing this application, you’ll also find out if you’re eligible for other types of federal financial aid such as Stafford loans.

If you’re not eligible for these loans or if they don’t cover all of your educational costs, you can also apply for PLUS loans or private education loans tiaa cref loan

Perkins Loans Federal Student Aid

There are many types of loans to help students pay for higher education costs. With their usually lower interest rates and more generous terms, federal student loans are the first place families should look for funding not covered by scholarships and grants. See College Loans: Private Vs. Federal.

Federal Perkins Loans and Federal Direct Loans are two types of loans offered through the federal government. 

Federal Direct and Perkins loans have certain features in common. Both types of loans:

Who qualifies. Perkins loans are available only to students with significant financial need, as determined by their answers to the FAFSA and their school's guidelines. Direct Subsidized Loans also require demonstrated need, but a wider range of incomes can qualify.  All three types of loans are open to qualified undergraduates; graduate students can only get Perkins Loans or Direct Unsubsidized Loans.

Loan subsidies. All Federal Perkins Loans are subsidized by the government, which means that the government will pay the interest that accrues while the student is in school at least half-time. The government will also pay interest during school for Direct Subsidized Loans, but not for the unsubsidized variety. Read Federal Direct Loans: Subsidized vs. Unsubsidized for more information.

Interest rates. For the 2015-2016 school year, Federal Direct Loan rates were 4.29% for both subsidized and unsubsidized undergraduate loans, and 5.84% for graduate and professional students. Interest rates are now tied to the 10-year Treasury note, plus a set margin. Click here to check current interest rates for Stafford loans. Perkins loans charge a flat rate of 5% for all borrowers.

Availability. The pool of money available to institutions for Perkins loans is more limited than that available for Federal Direct Loans. Although Perkins loans have federal limits on how much a student may borrow – both annually and cumulatively –  institutions typically set a limit that is substantially below these levels in order to preserve their funding pool.

Loan limits. Federal Direct Loans have different limits for graduates vs. undergraduates, and subsidized vs. unsubsidized loans. See Federal Direct Loan Limits. "Independent" students, those who file their own income tax returns, claiming themselves, are eligible to receive larger unsubsidized loans than those who are claimed as dependents on someone else's tax return. Perkins loans have one yearly limit for undergraduates and a larger one for graduate students. Perkins doesn't differentiate by undergraduate status or type of grad school.

The dollar limits for Direct Unsubsidized Loans are broken down as follows:

Repayment. The repayment term for Perkins Loans is always 10 years. While this is often the case for Stafford Loans as well, students may apply in some cases to stretch their payments out over a longer period, up to a maximum of 25 years.

If you're an undergraduate whose family income makes you eligible for a Perkins loan, you're likely also eligible for a Direct Subsidized Loan. Which should you choose 

For 2015-2016, the Perkins loan 5% fixed interest rate is higher than the Federal Direct Loan interest rate for undergraduates (4.29%), but Perkins loans don't have an origination fee. If you don't end up needing money from both, do the math to determine which offers the better deal for you. As a freshman and sophomore, you can borrow more from Perkins; in subsequent years, the loan limits are the same.

For grad students, if you meet Perkins loan criteria, you will get a better interest rate than with a Direct Unsubsidized Loan (5% compared to 5.84%). With a Perkins, you won't have to pay interest until after graduation; with a Direct Unsubsidized Loan (since you don't qualify for a subsidized loan), you will. On the other hand, the Direct Unsubsidized Loan has higher loan limits.

If you don't meet the financial criteria for a Perkins, your only choice is a Direct Unsubsidized Loan. Depending on your income, the unsubsidized loan may be your only option.

For more information on each type of loan – and other federal student-loan options – visit the federal student loan website at or consult your college's financial aid officer. Click here for a comparison chart usda loans nc

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