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Perkins Loan
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Article on Perkins Loan
The federal Perkins Loan is one of the best federal loans offered to postsecondary students. As a result, all incoming students interested should apply by completing a FAFSA. Firstly, its wise to understand what a Perkins Loan is and who will benefit from one.
What is the Perkins Loan?
The federal Perkins Loan is a program named after Carl D. Perkins, former member of the U.S. House of Representatives from the state of Kentucky. This loan has a low fixed interest rate of 5% for the duration of the ten year repayment period, and a nine month grace period. Repayment begins in the tenth month following graduation, whenever a student falls below a half-time status or withdrawals from college. This loan is subsidized by the government and interest doesn’t begin to accrue until the borrower begins repaying the loan. Loan limits may change from year to year so check with your school for details.
Who is Eligible for the Perkins Loan?
Requirements for this loan include students who are enrolled in a degree program in an eligible school at least half-time; have U.S. citizenship, permanent residency or eligible non-citizen status; have made satisfactory academic progress; have no unresolved defaults on educational loans or grants; have completed the FAFSA; have met all Selective Service requirements. The U.S. Department of Education provides the funding to the school who in turn determines which students have the greatest need. The school will either pay the student directly or apply it to the school’s charges. Loans are received in at least two payments during the academic year, usually at the start of each semester.
What Schools Offer the Perkins Loan?
Students can receive funding from any one of the over 1800 participating schools and the financial aid administrators have substantial flexibility when determining the amount of the loan and who receives them. Financial need is determined by the Department of Education using a standard formula obtained from information provided on the student’s FAFSA. This is determined by the student’s income and assets if independent, the parent’s income and assets if dependent, household size, and the number of family members attending postsecondary institutions. After the FAFSA has been completed, the student will receive a SAR (Student Aid Report) which provides the needed information.
Federal Loan Cancelation
The Perkins Loan is eligible for Federal Loan Cancelation for teachers who are teaching in certain low income schools or those who teach in teacher shortage areas such as science, math, and bilingual education. A percentage of this loan will be canceled, on a graduating scale, for each year that is spent teaching on a full time basis. The typical graduating scale is 15% for the first and second years, 20% for the third and fourth years, and 30% for the fifth year. Percentages are based on the original debt owed. An example would be: after three years of service in a designated area or field, 50% of the original debt would be canceled.
For those eligible, the Perkins Loan is an excellent help for students wanting to finance their postsecondary education, especially those in certain designated fields.
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