Federal Perkins Student Loans

Federal Perkins Loans are low interest government loans made through a participating school to undergraduate and graduate students with substantial financial need.

In order to qualify for a Perkins student loan, a student's Expected Family Contribution (EFC) as determined by the government's FAFSA (Free Application for Federal Student Aid) must demonstrate the greatest level of financial need.

Recipients of Federal Pell Grants receive priority for Perkins Loans.

Apply for Your Perkins Student Loan Early

When applying for financial aid, it's important to note that schools distribute Perkins Loans on behalf of the government, and when the funds are gone, the funds are GONE.

This means that even if you qualify for a Perkins Loan you may not actually get one. So with interest rates steady at 5%, it's in your best interest to submit your FAFSA on January 1 or as close to that date as possible. This will ensure that you get the maximum amount of Perkins Loan funds you are entitled to.

Perkins Amounts

The maximum amount for a Federal Perkins Loan made to an undergraduate student is $4000 per year, up to a total of $20,000 over the course of an undergraduate program.

For graduate students, the maximums are higher, at $6,000 per year and $40,000 over the course of graduate studies.

How the Government Helps You Pay Back Your Perkins Loan

The federal government subsidizes all Perkins Loans. So while you are in school, and while the loan is in any type of deferment period, the federal government picks up the tab for the interest.

This can save you thousands of dollars in interest when you eventually repay your loan. An example follows:

Say an undergraduate student is able to take the maximum Perkins Loan amount of $4,000 each year at 5% interest. The government will pay the student's interest on the first loan for over fours years (four school years plus a six month grace period), over three years on the second loan, over two years on the third loan and over a year on the fourth loan.

This would equate to more than $2,000 in interest payments that you don't have to make. That's like getting an extra two thousand dollars free to pay for your schooling!

Eligibility Requirements

In addition to your EFC score, eligibility requirements for the Federal Perkins Loan are as follows. You must:

Be a United States citizen or an eligible non-citizen with a valid social security number

Demonstrate exceptional financial need

Be working toward a degree or certificate in an eligible program

Have a high school diploma, GED or pass an approved ability-to-benefit (ABT) test

Register with the Selective Service if you're a male between 18 and 25

Maintain satisfactory academic progress

The Benefits of a Perkins Loan

Every year billions of dollars are awarded to students in federal student aid.

The federal government offers many different types of student loans such as Subsidized and Unsubsidized Stafford Loans, as well as the PLUS Loan to parents to help their student pay for school.

One of the most popular federal student loans is the Federal Perkins Loan, which is a low interest government loan that is offered to students who exhibit financial need.

I highly suggest a Perkins Student Loan for three main reasons:

1) You don't need a cosigner -This is a great first loan to get on your own because you don't need a cosigner to extend their good credit to you to get it.

2) You can have bad credit or no credit -Since you most likely have no established credit, or you may have bad credit from previous credit card charges, you are still eligible to receive a Federal Perkins Loan.

3) The government pays your interest - This is the most appealing and money-saving benefit of the Federal Perkins Loan. The federal government subsidizes all Perkins Loans, so as long as you are enrolled at least half-time in a degree program, and while the loan is in any type of deferment period, the federal government picks up the tab for the interest. You will end up saving thousands of dollars in interest once you finally start to pay back your loan.

If you're offered a Perkins Loan, you'd be wise to take the full amount you are eligible for. With a low interest rate of 5%, a Stafford Loan, private loan or any other loan product won't be able to compete.

Since a Perkins Loan will most likely not satisfy all of your student aid needs, you can apply for other federal student loan products, like a Subsidized Stafford Loan or an Unsubsidized Stafford Loan.

If you're still coming up short after you've exhausted your federal aid resources, you should seek out a Private or Alternative Loan source.

About the Author

Trish Smith is a copywriter for Green Student U, Student Finance Domain and Study Abroad Domain, websites that are devoted to providing college students with helpful environmental, financial and study abroad advice.

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