Perkins Loans

Perkins Student Loans Make College More Accessible

Federal Perkins Loans are low interest government loans made through a participating school to undergraduate and graduate students with substantial financial need. In order to qualify for a Perkins student loan, a student's Expected Family Contribution (EFC) as determined by the government's FAFSA (Free Application for Federal Student Aid) must demonstrate the greatest level of financial need. Recipients of Federal Pell Grants receive priority for Perkins Loans.

When applying for financial aid, it's important to note that schools distribute Perkins Loans on behalf of the government and when the funds are gone, the funds are gone. This means that even if you qualify for a Perkins Loan you may not actually get one. So with interest rates steady at 5%, it's in your best interest to submit your FAFSA on January 1 or as close to that date as possible. This will ensure that you get the maximum amount of Perkins Loan funds you are entitled to, as well as all of the Perkins Loan Benefits.

The maximum amount for a Federal Perkins Loan made to an undergraduate student is $4000 per year, up to a total of $20,000 over the course of an undergraduate program. For graduate students, the maximums are higher, at $6,000 per year and $40,000 over the course of graduate studies.

The federal government subsidizes all Perkins Loans. So while you are in school, and while the loan is in any type of deferment period, the federal government picks up the tab for the interest. This can save you thousands of dollars in interest when you eventually repay your loan. An example follows:

Say an undergraduate student is able to take the maximum Perkins Loan amount of $4,000 each year at 5% interest. The government will pay the student's interest on the first loan for over fours years (four school years plus a six month grace period), over three years on the second loan, over two years on the third loan and over a year on the fourth loan. This would equate to more than $2,000 in interest payments that you don't have to make. That's like getting an extra two thousand dollars free to pay for your schooling.

In addition to your EFC score, eligibility requirements for the Federal Perkins Loan are as follows. You must:

• Be a United States citizen or an eligible noncitizen with a valid social security number
• Demonstrate exceptional financial need
• Be working toward a degree or certificate in an eligible program
• Have a high school diploma, GED or pass an approved ability-to-benefit (ABT) test
• Register with the Selective Service if you're a male between 18 and 25
• Maintain satisfactory academic progress

If you're offered a Perkins Loan, you'd be wise to take the full amount you are eligible for. With a low interest rate of 5%, a Stafford Loan, private loan or any other loan product won't be able to compete. Since a Perkins Loan will most likely not satisfy all of your student aid needs, you can apply for other federal student loan products, like a Subsidized Stafford Loan, or Unsubsidized Stafford Loan. If you're still coming up short after you've exhausted your federal aid resources, you should seek out a private or alternative loan source.