Federal Perkins Loans

A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate and graduate students with exceptional financial need. Federal Perkins Loans are made through a school’s financial aid office. Your school is your lender, and the loan is made with government funds. You must repay this loan to your school.

Your school will either pay you directly (usually by check) or apply your loan to your school charges. You’ll receive the loan in at least two payments during the academic year.

How much can I borrow?

You can borrow up to $5,500 for each year of undergraduate study (the total you can borrow as an undergraduate is $27,500). For graduate studies, you can borrow up to $8,000 per year (the total you can borrow as a graduate is $60,000 which includes amounts borrowed as an undergraduate). The amount you receive depends on when you apply, your financial need, and the funding level at the school.

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.

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.

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.