What is a Perkins Loan?

A Perkins loan comes from a pool of federal financial aid funds that the school lends.  Check with your school’s financial aid office, as not all colleges participate in the program.  If your FAFSA reveals extreme financial hardship or need, you can get one of these loans.  Those who apply for financial aid early have a higher chance.  Instead of paying back to the government, you pay your loan to the school.  As of 2012, the annual limit was $5,500 for undergrads and $8,000 for graduate students.  The government pays interest in school and during grace periods.

What was a Perkins Loan?

A Perkins loan was a type of educational financial aid provided through the US government’s Perkins Loan Program.  The federal program provided low-interest loans to undergraduate and graduate students who demonstrated exceptional financial need.  This requirement was determined by the educational institution’s guidelines and the student-provided information on the Free Application for Federal Student Aid (FAFSA) application for all government loans.  Beginning in 1958, the Perkins Loan Program ended in September 2017 providing loans to approximately 500,000 students and 1,400 schools.

Eligibility for Perkins Loan :

To receive either a subsidy or a Perkins loan, you must fill out a FASFA each year.  You must also meet the standard eligibility for federal student aid.  Some of those qualifications include a valid Social Security number, U.S. citizenship or eligible noncitizenship, and satisfactory academic progress.  You cannot be in default on any past student loans or have a conviction for illegal drugs on your record.  You should also be working towards a degree or professional certificate at a qualified school.

Financial need

Scholarships, private grants, and Pell grants will ease your financial need.  The government typically gives Pell grants to those who have the lowest expected family contribution and highest need.  If you still have a significant need after Perkins loans and any grants and scholarships, you will be offered a subsidized loan.  Your concessional loan award will not exceed the total limit, including the total limit.  The aggregate limit is the cumulative amount that an individual is allowed to borrow.

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The Perkins loan program ended at the end of September 2017.

How a Perkins Loan Worked ?

Perkins’ loans were given through the financial aid office of the educational institution the student was attending.  Loans were either paid directly to the student (usually by check) or the loan amount was applied towards institutional fees and qualified educational expenses.

Technically, Perkins loans were only subsidized by the government – ​​that is, the government paid the interest on which the student was pursuing the degree.  The school was the actual lender, and so the loan was repaid to the school.

The interest rate was 5%.

Aside from interest, there were no other fees or charges associated with the Perkins loan.  But like all loans, if a borrower missed a payment, or a payment was sent late, they will most likely be charged a late fee, or collection fee, depending on the educational institution that issued the loan.

Repayment on the loan began nine months after the student graduated, dropped out of school, or moved below half-time status.

Perkins Loans vs. Other Federal Student Loans

Although the Perkins loan program was allowed to end, the US Department of Education’s William D.  Ford helps students finance higher education through the Federal Loan Program.  Unlike the Perkins program, the government itself is the lender in this case;  Hence the name “direct loan.”

there are four types of federal direct loans available as of February 2019;

Direct subsidized loans are made to eligible undergraduate students who demonstrate a financial need to help cover the cost of higher education in college or career school.  The size of the loan increases with each collegiate year, starting at $3,500 and rising to $5,500 for dependent students.

Direct unsubsidized loans are loans given to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.  The loan size increases with each collegiate year, starting at $5,500 and increasing to $7,500 for dependent students.  The annual range for independent graduate students is $9,500 to $12,500;  Undergraduate students can borrow up to $20,500.

Direct PLUS loans are loans given to undergraduate or professional students and parents of dependent graduate students to help pay for education expenses not covered by other types of financial aid.  Eligibility is not based on financial need, but a credit check is required.  Borrowers who have an adverse credit history must meet additional requirements to qualify.

Direct consolidation loans allow borrowers to combine all of their eligible federal student loans with a single lender into a single loan.

Why is Perkins Loan Expiring?

Due to budgetary issues, the federal government began eliminating the Perkins loan in 2015 but later extended the program until 2017 in the hope that a more permanent solution would be created.

How Do I Know If I Have a Perkins Loan?

If you’re not sure if you have a Perkins loan, find out by signing into the National Student Loan Data System.

Who Qualifies for Federal Perkins Loans?

Both Stafford and Perkins Loans offer low-cost loan options for undergraduate, graduate, and professional students.  … Unsubsidized Stafford Loans are available to all students, regardless of financial need.  Perkins Loans are awarded to students who demonstrate exceptional financial need.  Not all schools offer Perkins loans.