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Federal Perkins Loans for Undergraduate and Graduate Students

Federal Perkins Loans are a type of federal financial aid offered by the U.S. department of Education, intended to help students in financial need enrolled in one of 1,700 accredited U.S. postsecondary educational institutions to pay for their college or university expenses. The lender is college or university, rather than financial institution or Federal government. Government provides funds to each participating postsecondary institution and the institution then distributes funds to students in high financial need.

Under Federal Perkins Loan plan, undergraduate students can borrow up to $4,000 per year with a full amount of $20,000 borrowed during student’s undergraduate years at college. Graduate students or students in professional studies, may borrow up to $6,000 annually with a total sum of $40,000 of student loan. The definite amount you will receive is based on your financial need and amount of funds your college or university has available for providing students with this type of aid.

Eligibility Requirements

To be eligible for Federal Perkins Student Loan student must meet certain criteria:  he or she must be enrolled at least on half-time basis in postsecondary educational institution that participates in Federal Family Education Loan Program. Furthermore, she/he must demonstrate high financial need. Additionally, to be eligible for Perkins Student Loans student loan candidate must be a U.S. citizen or national, a U.S. permanent resident or eligible non-resident.

Perkins Student Loan Benefits and Downsides

In the contrary to other student loan options, under the Perkins Loan program students have advantage of nine months grace period, which means that your repayment of the loan will begin nine months after you finish college or university or fall under half-time college status. Further benefits of this plan are ten years repayment period and no penalty charged  if you choose to pay off the loan in shorter period.

Perkins Loans borrowers qualify for Federal Loan Cancellation or loan forgiveness program under condition that they work in authorized “low-income” schools or as teachers in designated high demand teaching areas like science, math and bilingual education. Peace Corps Volunteers also qualify for the loan cancellation.

On the other side, eligibility requirements are stricter than under, for example, some private loan plans and you will have to pay the higher monthly amounts because of the relatively short repayment period.

Perkins Loan Interest Rates

Perkins Loans are issued with a fixed interest rate of 5% during the ten-year repayment period. This loan plan has nine month grace period which allows you to find a job after graduating in order to repay your loan easily. You will also have to repay your Perkins loan in case you fall below half-time status at school or withdraw from the college or university.

How to Apply

In order to apply for this type of financial aid, you must first file a Free Application for Federal Student Aid (FAFSA), which can be completed online, at http://www.fafsa.ed.gov. You also must complete a Federal Perkins Loan Master Promissory Note (MPN) in order to receive this student loan. The MPN classifies the all the conditions connected to terms of borrowing and repayment of the loan.

You are also required to complete Perkins Loan Entrance Counseling before loan funds are paid. The reason of this counseling is to ensure you completely understand your rights and obligations connected to a student loan borrowing. Additionally, you must complete exit counseling after you graduate, withdraw or enroll in less than 6 units.

You are going to receive the loan funds from your school divided into two installments. There are two disbursement options: money can be placed in your student account for you or you can receive a check. The loan is usually divided into two payments, unless the loan is for a very small amount. As a Perkins Loan borrower, you don’t have to pay origination or insurance fees.

Federal Perkins Student Loan is one of the available financial aids for students today. Before applying for the student loan you should consider all the other existing borrowing options as well.

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