Is The Federal Perkins Student Loans Program Right For Us?

Students in serious financial need can apply to the Federal Perkins Student Loans Program.

Named after Carl D. Perkins, a former member of the house of representatives, The Federal Perkins Student Loan Program is another Government funded loan program in addition to the Stafford loans and the Parent Plus loans. The Perkins loans, as they’re known, are given to those that will still be unable to afford their education even after the Stafford and Parent loans.

Perkin Student Loans amounts are determined by the college to which the applicant is enrolled. The school, in this case, acts as the lender of these loans, and distributes the finances as it sees fit to students in substantial financial need. The funding for the Perkins loan programs comes from a predetermined amount of money provided by the government each year.

Perkins student loans are some of easiest loans to pay back, as they are subsidized with the interest paid by the federal government while the student is enrolled full time in school. There are no fees for taking the loan and the interest rate is kept static at 5%, regardless of the state of the economy. But Perkins loans also have a low maximum, capping off at $4,000 per year for undergraduates and $6,000 per year for graduate students (with a lifetime limit of $40,000). Perkins loans, like Stafford loans, also offer at ten year repayment period.

When these loans are paid back, the funds are reinvested into the school’s Perkins loan fund, to be given to other students in the future.

Other Pluses of Perkins Student Loans

Perkins loans sometimes qualify for what’s known as “Loan Forgiveness.” If you qualify for certain criteria, such as becoming a public school teacher, working with underprivileged youth, volunteering or enrolling in the military, you can have your loans “forgiven” which essentially means you no longer owe the remainder of their balance. There are several criteria you need to meet in order to qualify for loan forgiveness, most of these qualifications are available on the department of education financial aid website (http://www.ed.gov/offices/OSFAP/DCS/loan.cancellation.discharge.html), but Perkins and Stafford are some of the only loans that allow this type of loan cancellation.

The 5% interest rate will also never change. When interest rates are low, this can seem a little expensive. But when interest rates are high, this static rate can be a great way to finance your education.

How to Qualify for a Perkins Loan

To qualify for a Perkins loan, you must fill have filled out the FAFSA (Free Application for Federal Student Aid) and be found to be in substantial financial need. If you believe you fall under this category, it is best to fill out the FAFSA early, as these loans come from a limited monetary pool and can quickly run out if enough people qualify for the loan.