Federal Perkins Loans for College Students

Campus-Based Student Financial Aid from the Government

A Federal Perkins Loan is a federally guaranteed student loan that is disbursed through the college you will be attending. This low-interest, long-term loan is specially designed for students with serious financial hardship.

Many fewer Perkins Loans are awarded in comparison to other Federal need-based aid: subsidized Stafford Loans and Pell Grants. The key to winning a Perkins Loan, besides demonstration of exceptional economic need, is early application for admission to your school along with early application for federal student aid.

This how the Perkins Loan works:

The federal government metes out funds directly to colleges and universities for campus-based aid programs, including the Perkins Loans. When you apply to a particular college it evaluates your financial situation in light of your FAFSA application. Funds are awarded on a first come, first served basis. Again, only the most financially challenged may qualify. If you are awarded a Pell Grant, a proven metric for financial need, then you are a priority candidate for a Perkins Loan.

Apply Online Using the FAFSA Form

The Free Application for Federal Student Aid (FAFSA) is the only way you can apply for federal student loans and grants, including the Perkins Loans. Fail to file by the FAFSA deadline and you absolutely eliminate yourself from federal student loans, a significant portion of state-based student loans, and even many scholarships and grants available through your college or university. File the FAFSA. You can do it online or print off a copy and mail it in. There’s even a Spanish version.

The financial information you provide on the FAFSA determines your award for all types of federal aid. You reapply for federal loans every academic year.

Maybe the biggest bonus when you apply for federal assistance: the Perkins Loan is a no credit check loan.

The real beauty of the Perkins Loan is its accessibility for financially marginal borrowers. Regardless of your credit history you may be approved for Perkins loans. Repay your Perkins Loan on time and you actually will build credit, even repair bad credit.

Perkins Loan Limits

So how much aid could you ideally receive under a Perkins Loan? What you actually receive is based on available college funds at the time, totally regardless of loan limits. There is only a certain chunk of funds given to a school for Perkins students. Your best strategy for winning Perkins Loans: apply early for the FAFSA and college admission. The campus is free to dispense Perkins Loans in arbitrary amounts as students are accepted and become eligible for funds.

In an ideal world undergraduate students may be approved for up to $4,000 and graduates for up to $6,000 each academic year.

Repaying a Perkins Loan

The Perkins Loan is packaged with a 5% interest rate and a 9-month grace period. Attend school at least half time and like a subsidized Stafford Loan you are not responsible for interest until repayment begins. The average length of repayment of the loan is approximately 10 years, barring any loan defaults or loan deferments.

When you begin making payments on your Perkins Loan you will most likely be billed by a student loan servicing company. Companies like these enter into contracts with colleges and universities to provide financial support for campus-based student loans.

What to Do Before You Default on Your Perkins Loan

Given the average student loan debt in the country it is no surprise that many lenders automatically offer alternative repayment programs that may be an option when your financial situation puts you at risk for loan default or even personal bankruptcy. Before you get to that point, consider the repayment choices you may have at your disposal:

If you choose to consolidate your federal loans, including your Perkins Loan you will pay one monthly payment. Ideally the amount you send out each month will be smaller than what you had been responsible for, but your payment term will be extended. The primary drawback is that you’ll pay much more in the long run, but your financial reputation may be salvaged.

Student Teachers: How to Get Your Perkins Loan Cancelled

If you are a student teacher receiving a federal Perkins Loan, you may qualify for partial or full loan cancellation when you agree to work full-time in a critical need teaching capacity. The federal government maintains a detailed outline of the requirements for Perkins Loan cancellation, and criteria that define “full-time teachers” and “critical need areas.”

Here’s how the Perkins Loan teacher cancellation adds up: Get Your Loans Paid in 5 Years

Work for the first two years and have 15% of your loan cancelled per year (30%), work another two years in the same capacity and qualify for another 20% cancellation per year (40%), then for just an additional year (the 5 th year) you’ll earn a final 30% cancellation, for a total of 100% Perkins Loan cancellation.