Financing a Perkins Loan Consolidation
Get Lower Rates on Your Federal Loans
The federal Perkins Loan is disbursed to millions of college students annually directly through their colleges and universities. This is a first-come, first-served loan provided to students with significant financial need. But many students also carry federal Stafford Loans as well, complicating the burden of student loan debt.
Students with multiple federal loans are increasingly concerned about how they will meet repayment agreements after graduation. Combine multiple student loan payments with an underpaying job and you have a recipe for possible financial disaster.
Good news: federal consolidation loans may help you avert a financial disaster but Perkins Loans are different from your Stafford and PLUS federal loans and in some cases are not well suited to consolidation.
What you need to know about consolidating your Perkins Loan
Perkins Loans stand apart from the other federal student loans. Perkins feature special benefits and perks and are not always recommended for consolidation.
The number one drawback to consolidating a Perkins Loan is loss of loan cancellation benefits. If you are or will be a public school teacher or teaching a math or science or special education subject, you qualify for Perkins loan cancellation. When you consolidate your Perkins loan, though, the cancellation benefit is eliminated—you’ll pay full price for your Perkins Loan.
**Best strategy if you’re considering Perkins Loan consolidation: speak with your loan manager or lender first—your college or university is most likely your lender. This source knows best what your options might be and has access to all your account information and payment history.
Consolidation Through the Direct Federal Loan Program
Perkins Loans may be consolidated through the federal Direct Loan Consolidation Program when you have at least one Direct Federal Loan other than the Perkins that you’d like to consolidate. A Perkins Loan is never really considered a part of the Direct Federal loan program—it is a campus-based loan program; your school is your lender.
**If you consolidate through the Direct Federal Loan program you lose the grace period provided with your Perkins Loan—nine months compared to the six months for a Stafford Loan.
Consolidation Through a FFELP Lender
Federal Perkins Loans are alternatively available through a Federal Family Education Loan Program (FFELP) lender. Lenders have specific criteria for consolidation loans and not all offer these products. Interest rates are fixed by government computation. Before you roll your Perkins Loan into a FFELP consolidation loan, check with your Perkins lender for the best strategy.
Many lenders have expanded their debt management tools to include lower-cost alternatives to a student loan consolidation. Consult with your loan representative for the best consolidation or repayment product.