Student loans: The Federal Perkins Loan

The Federal Perkins Loan

Let's face the facts, going to college is expensive. If you're looking for a little financial help, your best bet would be to apply for a grant (money that is given to you based on your need and doesn't have to be paid back). To apply for financial assistance from the Federal Government, fill out the Free Application for Federal Student Aid (FAFSA). You can learn all about how this works and fill out the form at www.fafsa.ed.gov.

If you've found that you don't qualify for grant money, your next best bet is through a scholarship. Some schools offer full-ride scholarships, which means that they'll pay for every single academic expense you have for a number of years. If you qualify for such a scholarship, chances are you've already been contacted by the school. Other scholarships offer lesser amounts of money based on either outstanding performance in academics, sports, music, the arts, or based on gender or nationality. Check out a huge database of free scholarship information at www.fastweb.com.

We're not here to talk about free money, though. If you still need money for college after exhausting all of your other resources, and you know you won't be able to make up the difference by working a part-time job, then it's time to borrow some money in the form of a loan. There are many different loans out there. Individual banks, institutions and Universities will often have their own loans to offer.

There are far too many loans to consider each one individually, so let's just consider the most popular ones. We'll start with Federal Loans (money given from the Federal Government). To apply for these, you'll need to fill out the FAFSA to see how much you qualify for, and then apply for the loan. Let's look at how Federal Perkins Loans work.

An Overview of the Federal Perkins Loan

The Federal Perkins Loan is a low-interest loan that is given based on need. It primarily uses federal funds, even though the individual school contributes a share. Because of this fact, the school is the lender (as opposed to a bank or other financial institution). Since this loan is handled by the school, it only has a limited number of resources to dish out. You'll want to make sure that you talk to your financial office early, and DON'T miss the deadlines, which vary by school.

The Perkins loan is in a category of "campus-based programs," which means that the University is in charge of distributing the funds. The funds are distributed to the University under the Federal Perkins Loan Program.

Who's Eligible?

This loan is available to both undergraduate and graduate students, but because this loan is administered through the college or university it will be necessary to get in touch with each school to which you apply in order to determine your eligibility.

A basic rule is that this loan is available to all students enrolled at least half time.

How do I get the Loan?

Again, since this loan is taken care of by your school, the application process will begin with talking to your school's financial advisor.  Your financial advisor will help you determine your need, and they'll know how much money the school has to offer and how you stand against other students who have requested the loan.

How much do I get?

While this amount will vary between schools, a good estimated figure is $4,000 per undergraduate year (max $20,000), and $6,000 each graduate year (max $40,000).

How much do I pay?

There aren't really any fees associated with a Federal Perkins Loan besides the low interest rate (usually 5%).  However, just like a credit card, if you miss a payment, make a late payment, or make an incomplete payment, it's very likely you'll be charged a penalty.

This isn't true with all loans.  With the Federal Stafford loans, you have more flexibility in how you pay the money back, even though you'll most likely be charged a higher interest rate.

What are the Payment terms?

You will have a nine month grace period to begin paying back the loan after you graduate, leave school, or drop below half time enrollment.  After the grace period the loan must be repaid in full by the specified time-usually 10 years.

That's the basics of the Federal Perkins Loan.  If it seems like something that could work for you, talk to your school's financial office.  If the Federal Perkins Loan doesn't seem like something that will work, try one of the other Federal Loans: the Stafford, or PLUS loans, or look into a Pell Grant.