Undergraduate and graduate students who have established financial need may be eligible to receive a Perkins Loan. The Perkins Loan program is commonly referred to as a campus-based program because the schools act as lenders and financial administrators. While this is a federally funded program, it is the individual schools that determine what is exceptional need, the basis for distributing these funds.
Key characteristics
- Perkins Loans must be repaid
- Lender: This is a campus-based program with the school acting as the lender
- Insurance: The school insures the loan with the backing of the federal government
- Interest rate: Annual rate of 5 percent. Usually subsidized; the school makes the determination
- Deadlines: Apply as early in the year as your school allows (usually this is shortly after January 1)
Several hundred million dollars are distributed through this very low-interest loan program. If you have already been awarded a Pell Grant, your chances of receiving more money from a Perkins Loan if you need it are very good.
TIP…Since each college or university determines what the need parameters are for getting a Perkins Loan, don’t be surprised if you meet the definition of exceptional need at one school but not at another. So be sure to apply for this loan at each school you plan to attend.
How Do I Determine My Eligibility?
- You must be an undergraduate or graduate student
- Your school must have funds allocatable to the Perkins Loan program
- You must be attending school at least half-time
- You must be working on your first undergraduate or graduate degree (people working on their second degree are not eligible)
- You must be a U.S. citizen or eligible non-citizen
How Much Can I Get?
- $5,500 per year for undergraduate students, with a maximum of $27,500
- $8,000 per year for graduate students, with a maximum of $60,000 (this figure includes all money from any previous Perkins Loans as well)
- Students may be able to borrow more than the set amount, but only if their school has a default rate of 7.5 percent or less; check with the financial aid office at your institution
- Students can borrow up to 20 percent above the set limit annually if they are participating in a study-abroad program and receiving approved credits from a U.S. institution
Note: Amounts change periodically.
Getting Started
Remember, this is a campus-based loan program, so applicants need to apply at their school (not with an independent lender). As soon as you know that you will be applying for aid, you should visit your financial aid adviser and obtain the FAFSA or any other necessary forms. Timeliness is important. Schools cannot give out any more money once they run out, so apply very early for the Perkins Loan. Typically, schools ask that you apply as soon after the first of the year as possible. Proving financial need is also important, so sit down and talk with your financial adviser and your parents to help you determine the best ways to prove need.
Disbursement
TIP…If you serve in certain divisions of the Armed Forces, the Department of Defense may repay a portion of your Perkins Loan as an incentive for you to enlist. Contact a local recruiting officer for more information.
The total amount that your school awards you is dependent on both your financial need and how much money you’ve received from other aid programs.
Once you have qualified for the Perkins Loan, you will need to sign a promissory note to receive your money. A promissory note is a binding agreement between you and the school, stating that you will repay the money you have borrowed. When disbursements are made, the school will either give you the money or credit your account, depending on the system used by the financial aid office. The number of loan payments you receive each year depends on the amount borrowed and your school’s operating system. If your school is on the semester system, you’ll receive the loan in two payments at the beginning of each fall and spring semester. Schools running on the quarter system disburse loans at the beginning of each quarter, or at least three times a year excluding summer.
Students who borrow $500 or less for the entire school year will most likely receive only one payment. Every school uses a different method for disbursing aid, so check with the financial aid office at your college or university for details on disbursement dates, times, and locations.
Payment Terms
TIP…No matter what types of loans you have, before you determine whether a consolidation loan program offers any advantages, look at: 1) the size of monthly payments now and under the consolidation plan, 2) the difference in interest rates, and 3) the difference in total cost of the interest over the total life of the loan.
The payback plan for the Perkins Loan includes a long grace period for borrowers. A grace period is the time following graduation, termination of studies, or dropping below half-time status, during which students do not have to make payments on
their loan balance. Students have nine months before repayment begins with the Perkins Loan. Grace periods vary from school to school in cases where students drop below half-time. Contact the financial aid office for the exact amount of time given to such students. At the end of the grace period, students begin making monthly payments to their school. The amount of each payment depends on the amount of the loan, the length of the repayment period, and the date the loan was made. What you might find:
- Payments will be at least $40 a month
- The repayment period is typically ten years, but can be extended past this if the borrower’s income is low enough
- There is no prepayment penalty should you elect to pay back the loan in less time than allotted
The interest rate is fixed at 5 percent and does not accrue until you start making payments. The outstanding balance can be paid once or over a long period. Missed payments, late payments, and payments of less than the full amount are subject to penalty in the form of a late charge or collection fees. Charges on late payments are determined by each institution on an individual basis and will continue until payments are made on time.
Deferment of Perkins Loans
Deferring or postponing loan repayments is only granted under specific conditions. To postpone payments, you must fill out a deferment request form, available from the financial aid office at your school. Make sure you file your request before the deadline set by your school or you will be charged a late fee. Your deferment eligibility depends on the date your loan was first disbursed, and the following criteria:
Deferment is granted if you:
- Are enrolled at least half-time at a post-secondary institution
- Are involved in a rehabilitation program for the physically challenged
- Are participating in a graduate fellow- ship program
- Are serving in the Armed Forces in areas of immediate danger
- Teach full-time (specific qualifications and areas only)
- Volunteer in VISTA or the Peace Corps
- Work as a law enforcement or corrections officer
- Work full-time as a nurse or medical technician
- Work full-time as a public service employee
Deferment may be granted up to three years for:
- Inability to find full-time employment
- Economic difficulties
Contact the agency that carries your loan for deferment qualification.
If you need to apply for deferment and meet any one of the preceding qualifications, contact your financial aid office immediately for application details and deadlines. This will prevent you from missing or making any late payments and help you avoid collection fees and late charges.
Any students with loan debts of 20 percent or more of their gross income must be granted forbearance by their lending institutions. Forbearance is a period in which borrowers do not have to make any interest or principal payments on their loans for up to three years. Students must apply each year through their school to receive this benefit. Forbearance is also granted to students who cannot make payments and are not eligible for loan deferment. Contact the financial aid office at your college or university for application information.
Cancellation or forgiveness of a Perkins Loan occurs when the amount owed by the borrower is reduced or credited under certain conditions. Any student who has a Perkins Loan is eligible to apply for cancellation if they choose to work in a specific profession, join the armed forces, or volunteer for certain organizations following graduation. Partial or complete forgiveness depends on the time commitment of the borrower (that is, the more time given, the more money credited). You can request cancellation through your institution under the following conditions:
Up to 50 percent forgiveness:
- Armed forces service while stationed in areas of immediate danger
Up to 70 percent forgiveness:
- Peace Corps or VISTA volunteer
Up to 100 percent forgiveness:
- Complete and permanent disability of the borrower (100 percent)
- Bankruptcy (in some cases)
- Death of the borrower
- Teaching full-time in an area serving low-income students
- Teaching special education or disabled students full-time
- Working as a Head Start Program employee
- Working full-time as a medical technician or nurse
Get up to 100 percent forgiveness for:
- Full-time provider of certain services for the physically challenged
- Public service employee for child or family agencies in low-income areas
- Teaching full-time in an area where there is a shortage of teachers
Loans can also be forgiven in the following cases:
- Students who enter the teaching profession and remain teachers for at least five years can have loans forgiven up to $5,000.
- Students who earn an early childhood education degree and work in child-care facilities in low-income areas.
If you would like to apply for cancellation and you meet any one of the preceding requirements, contact your institution for application details. Remember, any questions or concerns you may have about deferments, repayment schedules, cancellations, or borrower responsibilities regarding your Perkins Loan must be directed to the financial aid office at the school where the loan was granted.
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