The Perkins Loan

When you are financing college you will find that there are many options for student loans. With private student loans and federal student loans and even grants, there is a lot to process. What many student don’t realize is that there are federal loans and other types of financial aid that are not as well known. The Federal Perkins Loan Program is one such financial aid option and it can make a big difference for a student who is going through an undergraduate or graduate program. This loan is different from other federal loan programs like the Direct Subsidized and Unsubsidized Loans. There are certain criteria that the student must meet in order to receive it and it is not available through all schools.

What is the Perkins Loan?

The Perkins Loan is a program that provides federal student loans to students who meet very specific criteria. It is a school based loan program, making the school the lender. This means that when it is time to repay the loan, the student does not pay the loan servicer for the school, but instead pays the school that made the loan. It also has a very low interest rate which is currently 5 percent.

Some schools do not participate in the Perkins Loan Program. To find out if your school does, call or visit the financial aid office and ask. It is available to graduate, undergraduate, and professional students. However, the student must have an exceptional financial need in order to qualify.

Who qualifies?

A student may be eligible for the Perkins Loan if they meet three criteria:

• The school they are attending participates in the Federal Perkins Loan Program
• They are enrolled either full time or part time
• They are an undergraduate, graduate, or professional student who has “exceptional” financial need

Financial need is based on the COA (cost of attendance) at the school where the student is enrolled and their EFC (expected family contribution). Different schools often have a different COA but the student’s EFC does not change from school to school because it is based on their personal financial situation.

How much can you borrow?

The amount a student can borrow is dependent upon several factors:

• The amount of funds available at their college
• The amount of student aid that the applicant receives
• The student’s financial need

It is important that you complete your FASFA early to ensure that you are considered for a Perkins Loan. Most schools have very limited funds so even student who qualify may not receive the loan because the funds are not available.

How do you receive your funds?

The funds from a Perkins Loan are received the same way that federal grants and loans are received. Once accepted, the school applies the money to tuition, room and board, fees, and other school expenses. Once everything is paid, any remaining money is issued to the student to help them pay for other expenses related to their education.

When do you have to repay the Perkins Loan?

Once the student drops below half time school attendance, leaves school, or graduates, they have 9 month before they have to start repaying the loan. Students who are still attending but are less than half time may have to begin repaying sooner, depending on the school. The financial aid office can provide the length of the grace period before the student has to begin repayment.

The Perkins Loan Program can help students meet the financial obligations of their education. It is important, though, that payments are made on time and no payments are skipped. If payments are missed or late, late fees may be charged and the account may be place with collections. It is wise to work out a budget and create a repayment play for student loans.