Federal Perkins Loans for College Students

Campus-Based Student Financial Aid from the Government

Perkins Loans are federally guaranteed student borrowing options that are administered jointly by the U.S. government and individual colleges and universities.  The low-interest, long-term loans target students with serious financial hardship.

A lion’s share of federal financial aid originates from the Pell Grant and William D. Ford Federal Direct Loan programs.  Select economically disadvantaged students are eligible for additional student aid designed to increase college access for society’s neediest groups.  Perkins Loans fill important funding roles for students who qualify; but the pool of aid isn’t bottomless.   If you have your eye on Perkins financing, the keys to winning a loan are filing early and meeting federal financial aid eligibility requirements.

Getting a Perkins Loan:

The Federal Government metes out funds directly to colleges and universities for some campus-based aid programs; including Perkins Loans. Individual colleges evaluate your financial aid needs based on information you submit to the government.  Financial aid administrators match-up your college funding requirements with whatever grants, scholarships and loans are available to tackle your bills.  If your ability to pay for school is significanly hindered by your economic background, Perkins loans bridge the affordability gap that remains after all other forms of financial aid are exhausted.

Families with annual incomes below $25,000 usually qualify for Perkins Loans. And If you qualify for a Pell Grant, which is also awarded based on financial need, then you are probably also a priority candidate for a Perkins Loan.  Your Perkins pursuit begins by submitting a standardized federal financial aid request.

Apply Online Using the FAFSA Form

The Free Application for Federal Student Aid (FAFSA) provides the only path to federal financial aid; including Perkins Loans.  The application gathers data about your family and finances.  Income, assets, number of familiy members and other relevant points are compiled to create a comprehensive snapshot of your family’s ability to contribute to your higher education expenses.

Federal FAFSA filing deadline is June 30th, but individual states and campuses impose their own unique filing requirements.  The application can be filed any time after January 1st, so students who are counting on federal aid; especially Perkins Loans, are encouraged to file as early as possible. Spanish-speaking students apply here.

A small percentage of FAFSA applicants are required to submit additional documentation or clarify application entries, but once your financial information is in place, an individual Student Aid Report (SAR) is generated.  The form is used by individual institutions of higher learning to evaluate your college funding outlook, and contains vital determinations like your Expected Family Contribution (EFC).  Considering family income limitations and the number of siblings you have that are also attending college, your EFC represents a baseline contribution that falls within your means.

When you submit your FAFSA, be prepared to identify your potential college destinations.  Each designated school receives a copy of your SAR, allowing them to craft custom financial aid packages that tap their own campus-based programs.  Formal offer letters from university financial aid offices break down the types of assistance the college is extending to you. To remain eligible for Perkins Loans and other federal student aid, resubmit current FAFSA data annually.

Perkins Loan Limits

For limited-credit college students, federal loans present attractive borrowing options, because Perkins and other government loans are not dispensed based on credit worthiness.  Regardless of your credit history , you may be approved for Perkins loans. Repaying your Perkins Loan on time actually helps you build credit, so responsible borrowing for education should not be under-utilized.

The school you attend becomes your Perkins lender, and not all universities participate in the program. Although the country is dotted with over 1,700 participating institutions of higher education, it is important to consult individual campus financial aid offices for specific program information.  The amount of funding available at any given school is strictly based on the financial resources in that particular college’s Perkins account.  Unfortunately, due to limited funding, some students who qualify for Perkins Loans do not receive them. Your best strategy for winning Perkins Loans: apply early for admission to your college and submit your FAFSA well before the filing deadline.

Needy undergraduate students may qualify for up to $5,500 in Perkins loans each year; with a cumulative maximum borrowing limit of $27,500, over the course of a student’s college career.

Graduate students qualify for up to $8000 annually, with a lifetime borrowing threshold of $60,000.

Repaying a Perkins Loan

Perkins Loans are packaged with a 5% interest rate and a 9-month grace period.  As long as you are enrolled in college at least half time, your loan interest does not accumulate.  You must begin repayment within 9 months of leaving school, or risk default.  Average Perkins Loan  repayment schedules are approximately 10 years, barring any loan deferments.

Your Perkins Loan promissory note binds you to the contract, so failing to follow through with scheduled payments has devastating credit consequences.  Your loan may be administered by a student loan servicing company. Companies like these enter into contracts with colleges and universities to provide financial support for campus-based student loan programs.

Don’t Default on Your Perkins Loan

Given the average student loan debt level across the country,  it is not surprising  that many lenders automatically offer alternative repayment options for student loan clients who are at risk for loan default or personal bankruptcy.  Tackle repayment difficulties before they snowball into credit catastrophes.  Once you are in default, it is hard to mitigate damage to your credit record.

Consider these repayment approaches and credit-saving strategies that might be at your disposal:

• There are times when your short-term financial situation makes it impossible to maintain monthly loan payments. When you lose your way, paying back your college debt, apply to your Perkins Loan servicing company for a loan hardship deferment. Once approved, your loan payment requirements are placed on hold for a designated period of time, allowing your finances to catch up with your repayment commitments.
• Do you have multiple federal student loans? Do you send monthly payments to a number of different billing agencies? Do you sometimes struggle to make all your required payments? If you answered yes to any of these questions, then take our financial self-assessment quiz.   For some students, Federal Direct Consolidation Loans provide manageable repayment solutions that appease creditors and protect your rating.  Consolidating Perkins and other loans does extend your repayment period, but it also lowers your monthly  payment.

Student Teachers: 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. Qualified teacher shortages are addresses with generous educational aid programs that allow teaching students to trade service for funding.  Certain requirements must be met to take advantage of the Perkins Loan cancellation for teachers option, and strict parameters define “full-time teachers” and “critical need areas.”

Participants earn loan offsets that are commensurate with the number of years they teach at high need schools.  Teachers who commit for two years enjoy 15%  loan cancellation rates for each year of service.  An additional 2-year stint earns another 20% cancelation for each year, and a final, fifth year commitment closes the books on the loan by cancelling the remaining 30%.