In order to qualify for Federal Perkins Loans, you will need to file a FAFSA, and wait for a determination by the school which you applied to. Federal Perkins Loans are provided to schools at a set level by the Department of Education. If you qualify for Federal Perkins Loans, the school will contribute some of their funds, along with funds that they receive from the department of education to assist you with your tuition costs.
Do you need to apply for Federal Perkins Loans?
The determination to qualify for Federal Perkins Loans is based on the criteria which are submitted in the FAFSA. The U.S. Department of Education uses a formula to assess the student’s Expected Family Contribution (EFC), in order to consider whether the student qualifies.
Some of the features and benefits In receiving Federal Perkins Loans are:
- There is a longer grace period for the student before the loan repayment process begins.
- The loan is paid directly to the school and outside lenders are not involved.
- The interest rate on Federal Perkins Loans is set at a fixed rate of 5% over a ten year repayment period.
- Federal Perkins Loans are also subsidized, so interest does not accrue until the repayment period begins.
Just as with Federal Stafford Loans, the student who receives a Federal Perkins Loan will be required to sign a master promissory note (MPN), in order to receive the loan. The yearly limitations on Federal Perkins Loans is $4,000 for undergraduate students and $6,000 for graduate students.
Federal Perkins Loans are typically only awarded to those students that display an exceptional financial need and offers a very flexible and affordable solution for many students. In order to receive Federal Perkins Loans, there are several expectations that students may be required to maintain. For example, to be accepted for the program, the student may not have had ever defaulted on a previous educational loan and must maintain an acceptable GPA while participating in the Federal Perkins Loan program.
Dealing With Student Loan Debt
As the saying goes, there’s little point in crying over spilled milk. If you’ve found yourself saddled with a mountain of student loan debt that has now spilled over into your life and peace of mind it is time to move forward with a plan of action. Because of a 2005 law, you cannot write off student loan debts except in very rare cases, so it is up to you to figure out a solution to pay off these debts while maintaining a comfortable lifestyle.
Update Your Mindset
You may feel discouraged and angry about your student loan debt load. You may feel that you’ve been bamboozled by school advisors, financial aid officers and even loved ones who told you that taking out college loans was normal and worthwhile. Get all of that anger out of your system in a productive way and change your mindset starting today. The debt is here, so now you have to manage it to the best of your ability.
Also, while you may not be able to wave a wand and make your own debt disappear you can pay a younger person a favor by advising them of your situation and how they can avoid taking out so many loans. You can also call your state representative and support petitions to help young people who are dealing with overwhelming student loan debt.
Get on a Graduated Plan
If cash flow is an issue, call your lender to inquire about a plan to make a low payment today that gradually increases with time. In many cases, you make an interest-only payment. With a low monthly payment now you have time to build your career and to work on increasing your income in the future. When the monthly payment amount does rise after a few years you might be in a better position to afford it. However, before you opt for a graduated payoff plan consult the lender to find out how this will affect the total amount of interest you’ll pay over the course of the loan.
Aggressive Payoff Commitment
If you have sufficient income and cannot stand the idea of making a student loan payment for 20 to 30 years, commit to an aggressive payoff plan. Send extra money with your regular payment each month and tell the lender to apply it to your principal balance. Depending on how much extra you pay each month you could slash the duration of your loan to just a few years instead of multiple decades.
Dealing with student loan debt is stressful, but instead of running away from the problem it’s best to face it head-on. Be proactive and communicate with your lender to find a solution.