Although in theory any student is eligible to take out a Perkins Loan, colleges are required to give priority to students with exceptional financial need. In practice, this means that the pool of money available for Perkins Loans is usually emptied well before students with some personal or family assets are reached.
Description
A federal program awarded by colleges, subject to
government funding levels and limitations. The school is the lender.
Availability: Offered to students with exceptional financial need, based on information provided on the FAFSA form.
Eligibility
Students must be enrolled at least half-time at an eligible
college; parents and student must complete and submit the FAFSA form
before the deadline date.
Loan amounts
In 2005, the program allowed for a maximum of
$4,000 per year, not to exceed $20,000 for an undergraduate program. The
amount offered is determined by the college’s financial aid office and may be
less than the maximum. Congress may increase or decrease overall funding
for the program each year, and maximums may change.
Disbursement
Borrowed money is paid directly to the school.
Tax issues: Interest may be tax-deductible based on income level.
Interest formula: Fixed rate set by the U.S. Department of Education.
In 2005, Perkins Loans bore a 5 percent interest rate.
Fees
No application fee.
Repayment
Repayment is scheduled to begin nine months after the
student graduates, withdraws from college, or drops below a minimum of
half-time status. The repayment period extends for ten years.
Under certain circumstances, including unemployment and illness, the
borrower may request a temporary deferral (or forbearance) of principal and
interest payments, although interest continues to accrue.
How to apply: File the FAFSA. Contact the college’s financial aid office
for additional information.
Read More: FEDERAL PERKINS LOAN
