Perkins Loans - Need to Know
Students who wish to earn degrees at accredited colleges or universities have a variety of financial aid options available, including Federal Perkins Loans. The loans have a very low interest rate, making them an ideal way to help pay for necessary educational expenses not covered by grants or scholarships. Perkins Loans are sometimes referred to as National Defense Student Loans or National Direct Student Loans.
The Federal Perkins Loan program is named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky. Mr. Perkins is also known for his work in implementing the Carl D. Perkins Vocational and Technical Education Act, legislation authorized in 1984 to provide increased funding for vocational schooling as a way to help the economy.
To receive a Federal Perkins Loan, you must meet certain eligibility criteria. You must be a United States citizen or an eligible non-citizen who has demonstrated financial need and is enrolled in a degree program at least half-time. You must not be in default on any previous student loans and you must be able to meet the satisfactory academic progress guidelines set forth by the college or university you wish to attend.
To apply for a Federal Perkins Loan, you need to complete the Free Application for Federal Student Aid (FAFSA) and have the results sent to the college or university you wish to attend. If it is determined that you are eligible for a Perkins Loan, your FAFSA award letter will list the amount you can borrow. Federal Perkins Loan amounts range from $500 to $4,000 per year, with a $20,000 lifetime limit for undergraduate study and a $40,000 cap for graduate work. Awards can't be automatically renewed; you will need to complete a FAFSA for each academic year you need financial aid.
Although Federal Perkins Loans share many of the same characteristics as subsidized Stafford Loans, there are two key differences in these important forms of financial aid. Perkins Loans, unlike Stafford Loans, have no fees. In addition, a student does not have to begin repaying Perkins Loan funds until nine months after leaving school. With Stafford Loans, the repayment period begins six months after the student is no longer enrolled at least half time.
Perkins Loan recipients receive their money as a check from the educational institution they are attending or as a direct credit towards tuition and fee expenses. Payments are generally made twice per year, once at the beginning of each semester. Interest does not accrue until you begin the loan's 10-year repayment period.
Loan cancellation benefits are available to Perkins Loan recipients who meet certain eligibility criteria. For example, these who work as teachers in schools that serve primarily low income students, accept full-time employment as a nurse or medical technician, volunteer in the Peace Corps, or perform active duty service in the military in an area that is eligible for special pay under Section 310 of the U.S. Code can have a percentage of their outstanding Perkins Loan balance forgiven. Additionally, there is a tax deduction for federal student loan interest available for certain borrowers.