We hear the question, what is a Perkins loan quite frequently. Basically, it is a federally funded loan by the Department of Education, with the money going directly to participating colleges. It can be used for undergraduate as well as graduate level studies.
However, the primary recipients of Perkins loans are those students who exhibit exceptional financial need. The definition of the term, exceptional financial need, is students with less than $10,000.00 of the Expected Family Contribution. It will also include students who have received other financial assistance, and still have some remaining financial need.
All of the above is based on information submitted on the FAFSA application. Any student interested in applying for a Perkins loan needs to be aware that there is generally a limited amount of funding available.
Most of each college’s allocation of these monies is granted to students during the summer term. Exceptions are made, but it will be on a case by case basis. So if you have an interest, please apply very early.
If you hear the question, what is a Perkins loan, you can remember that it has several advantages for those students that qualify. Some of them are as follows:
1. The interest rate is fixed at 5%
2. While the student is attending school, the government pays the interest on the loan.
3. After graduation, loan repayment is deferred for 9 months, not 6 like a student loan.
4. Plus, there are no fees associated with the loan.
5. No credit check on the applicant, so if you don’t have a good credit rating you still may qualify.
6. Low monthly payments. When the loan repayment begins, monthly payments are relatively small.
7. Loan forgiveness by service after graduation in the US through the Anmericorps program and in third world countries working with the Peace Corp. Annual amounts are set for loan forgiveness for each year of service.
The loan does have some disadvantages in that not all colleges participate, and funding is somewhat limited. At the present time, the maximum amount that can be borrowed for one academic year by an under graduate is $5,500.00, and the total amount in pursuit of a bachelor’s degree can’t exceed $27,500.00.
For a graduate student, the maximum per academic year is $8,000.00 with a total of $60,000.00; however the total includes any balance borrowed as an undergraduate.
Another answer to the question, what is a Perkins loan, is that it acts as a bridge between grants and/or scholarships. They can be used to cover tuition at any of the approximate 1,900 private and public colleges and universities in the United States.
Loan forgiveness on Perkins loans can be accomplished by entering military service, working in certain occupations such as teaching, or public service work.
The question, what is a Perkins loan, has been answered, and the next question is how do I get a Perkins loan? You simply need to apply with the FAFSA application at any of the schools that participate in the program.