Federal Perkins Loan
AnswerNote:
Top
Federal Perkins Loan
The US federal government awards Perkins Loans to undergraduate and graduate students on the basis of need. Students can be enrolled part- or full-time and should apply by filling out a Free Application for Federal Student Aid (FAFSA) form and signing a promissory note. The money is disbursed directly to the student, usually by check or by crediting the student's account. It is to be used first for school charges such as tuition, fees, and room and board.
Perkins Loans offer low fixed interest rates and a long grace period. The interest rate is fixed at 5%; repayment begins nine months after graduation, or if enrollment drops below half-time. Students have ten years to repay the loan, with minimum monthly payments set at $40 or more, depending on the size of the loan. The government subsidizes the interest while the student is in school and during grace and deferral periods.
Undergraduates can receive up to $4,000 annually in loans (up to a maximum total loan of $20,000); for graduate students the limit is $6,000 annually (up to a maximum total of $40,000, including undergraduate loans). However, the amount actually received by the student depends on the student's financial need, amount of other aid awarded, and the availability of funds at the school.
The government disburses a certain amount of Perkins Loan funds to schools each year. Students who apply for financial aid after the deadline, or after the funds have been allocated, might miss the opportunity to obtain a Perkins Loan, because the school won't receive more funds until the following school year.
More information about Perkins Loans can be found on the Federal Student Aid web site.
Last updated: April 26, 2006.
Investopedia Financial Dictionary:
Top
Perkins Loan
A loan program that provides low-interest student loans to undergraduate and graduate students who demonstrate exceptional financial need. The Perkins Loan is made through the student's school's financial aid office. The school is the lender, and therefore the loan is repaid to the school. The loan is paid either directly to the student (usually by a check) or the loan amount is applied towards school charges and expenses. Repayment on the loan begins nine months after the student graduates, leaves school or drops below half-time status.
Investopedia Says:
The Federal Perkins Loan Program has borrowing limits depending on when the student applies, the student's financial need and the school's funding level. Students can borrow up to $5,500 for each year of undergraduate study - up to $27,500 - and $8,000 for each year of graduate or professional study - up to $60,000, including any undergraduate Federal Perkins Loans.
Related Links:
These savings vehicles may be better than college saving funds for some families. Pay For A College Education With Retirement Funds
Student loans bridge the gap between college savings, scholarships and the part-time work. Student Loans: Loan Repayment
Student loans bridge the gap between college savings, scholarships and the part-time work. Student Loans: Federal Loans
