perkins loans

"Loans: The Perkins Loan Program"

The government awards three types of financial aid for higher education: grants, loans, and work-study. In the loan category there are four major programs backed by Uncle Sam: The Stafford Loan Program, PLUS Loan Program, Consolidation Loan Program, and the Perkins Loan Program.

The following are details about the Perkins Loan Program:

Details: 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.

Based on: Financial need, other aid you receive, and availability of funds at your school.

Amount: You can borrow up to $4,000 per year as an undergraduate (to a max of $15,000) or $6,000 per year as a graduate student. (to a max of $30,000)

Exception: You may be able to borrow more than these amounts if you're participating in a study abroad program or attending a school that has a default rate no higher than 15 percent and it chooses to participate under the Expanded Lending Option. Check with your school.

Cost: Five percent interest. There are no additional fees. A Perkins Loan borrower is not charged an origination fee or an insurance premium. However, if you skip a payment, if it's late, or if you make less than a full payment, you may have to pay a late charge plus any collection costs. Late charges will continue until your payments are current.

To apply: Contact your school to find out if additional information is required other than the Free Application for Federal Student Aid (FAFSA). Deadlines are determined by each school and may be earlier than the FAFSA deadline.

How you get the money: Your school will either pay you directly or credit your school account.

How you repay the money: If you're attending school at least half time, you have nine months after you graduate, leave school, or drop below half-time status before you must begin repayment. This is called a grace period. If you're attending less than half time, check with your FAA to determine your grace period. At the end of your grace period, you must begin repaying your loan. You may be allowed up to 10 years to repay.

How much will I have to pay each month? Your monthly payment amount will depend on the size of your debt and the length of your repayment period. The chart below shows typical monthly payments and total interest charges for three different 5-percent loans over a 10-year period.

Total Loan
Number of
Total Interest
$3,000 119 $31.84 $817.86 $3,817.86
1 $28.90

$5,000 119 $53.06 $1,363.40 $6,363.40
1 $49.26

$15,000 119 $159.16 $4,090.85 $19,090.85
1 $150.81

Under certain circumstances, you can receive a deferment to temporarily postpone payments on your loan. The Federal Government pays the accrued interest during the deferment period. Under certain circumstances you can receive forbearance, a limited and temporary postponement or reduction of your payments if you are unable to meet your repayment schedule and are not eligible for a deferment.

These circumstances may include poor health, serving in a medical or dental internship or residency, or if the payments exceed 20 percent of your monthly gross income. Interest is accrued during the forbearance period. Deferments and forbearance must be approved by your school.

Thank you for visiting,

Al Brouillard

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