Tell me about the Federal Perkins Loan?
The college I’m thinking of going to is offering me a Federal Perkins Loan. I’ve tried to avoid loans (relying on grants/scholarships instead) up till now, but if I go here it looks neccessary.
Have any of you had experience with this loan? How does the interest compare with other student loans? How does the repayment process work?
HELP!!!
Pros of the Federal Perkins Loan Program:
Rates:
Perkins Loan interest rates are fixed at 5%; this is incredibly unlkely to change. Beginning July 1st, 2006, Stafford loan rates will become fixed at 6.8%, so you can see that Perkins is a great option, even compared to other federal student loans. A few years ago, when Stafford rates were variable and had dropped below 3%, a lot of students were declining their Perkins awards. Now that Stafford rates have risen and Perkins rates have remained the same, many students are wishing they had chosen Perkins instead…
Perkins loans are subsidized, meaning that the government pays any interest that accrues (a) while you are in school, (b) during the 9-month grace period you receive once you graduate/leave school, and (c) during any deferments you are granted.
Standard repayment for Perkins loans is 10 years. However, you may be able to request a longer repayment term and Perkins Loans are also eligible for to be included in a Federal Consolidation Loan.
Benefits:
As you may know, some student loans carry forgiveness benefits. Stafford loans have a few (for teachers, mostly). Perkins Loans actually carry a much longer list of forgiveness/cancellation benefits, including:
* Law enforcement or corrections officers
* Peace Corps, AmeriCorps, VISTA
* those employed in a Head Start program
* Teachers in low-income schools, special education teachers, teachers in designated subject shortage areas, teachers of handicapped students
* Providers of early intervention services
* Nurse or medical technicians providing health care services
* those in the US armed forces
So, if you do accept your Perkins loan and end up working in any of these areas, you may not have to pay back your Perkins Loan at all!
Perkins Loan deferment options also tend to be more flexible than those of Stafford Loans.
Your school is the lender for any Perkins loans that they offer you. You might find that having a loan held by the school makes things much simpler when it comes time to repay — if you have any questions, you’ll know who to contact! Essentially, the school receives a limited pool of funds from the federal government, which they match (partially) and then allocate at their discretion (in keeping with the regulations set forth by the DOE). Perkins loans are meant for the school’s neediest students. Students must demonstrate financial need to qualify.
