We have discussed several different types of financial aid commonly available to undergraduate students trying to pay for college: Pell Grants, Stafford Loans, and Direct PLUS loans. Another type of loan available to students with financial need is the Perkins Loan.
Approximately 1,700 postsecondary institutions participate in the Federal Perkins Loan Program. Each institution receives a different amount of funding from the US Department of Education, and each is given a significant amount of flexibility and discretion when awarding that money. Because funding is limited and individual institutions have the authority to decide who merits how much, this means that you may qualify for a Perkins Loan but not receive one, or you may receive less than you qualify for. Factors that will influence how much aid through Perkins you can use to pay for college are the amount of aid you are receiving through other forms of financial assistance and the availability of funds for your specific school.
Perkin loans are very similar to Stafford Loans; the most notable differences between the two are that Perkin Loans have no fees (origination or default), a longer grace period (nine months instead of six months), and disbursement is handled directly by the school.
Perkins Loans share several important characteristics with some of the other loans we have discussed so far. In order to be eligible to receive a Perkins Loan you must fill out and submit your Free Application for Federal Student Aid (FASFA). Aso, Perkins Loans are not automatically renewable, so you must apply for them every year. Having to reapply for Perkins Loans each year means that it is quite possible that you may not receive the same amount from year to year, or even receive anything at all. When coming up with a strategy to pay for college, it is important that you keep many financial aid and payment options in mind.
As mentioned earlier, Perkins Loans are one of the most desirable loan types a student can obtain. One of the most attractive features of a Perkins Loan is its fixed interest rate and extended grace period. Currently, the Perkins Loan is fixed at a 5% interest rate and a nine month grace period. These loans are structured in such a way that students are not charged an interest rate on their debts (keeping in mind that each Perkins Loan is distinct unless you consolidate your debt) until nine months after graduation, drop to part-time student status, or withdraw from school.
How do you receive your Perkins Loan? The loan is given to your college or university, at which time it may be used to pay for any outstanding costs, including tuition, books, fees, etc. If there is any amount left over, you will be given that amount to use towards other educational expenses.
One of the main reasons Perkins Loans are not easy to obtain is the limited amount of funding available for so many needy students. Take a look at the chart below to get an idea of the amount of funding, if you qualify, you might receive to pay for college.
That does it for today’s discussion of Perkins Loans; join us next time as College Compass continues it serial on how to Pay for College. Find additional financial aid information here.
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