Federal Loans: Perkins Loan Program
The Perkins loan is for undergraduate and graduate students with exceptional financial need. These loans have the lowest cost of any federal loan program with an interest rate recently running at only five percent and no interest accrual until the loan repayment begins. Unlike the other federal school loans, there are no origination or default fees. These loans are called "campus-based" as they are made directly by the approximately 1800 participating schools. Funding for the loan is appropriated by the U.S. Dept. of Education with additional funding provided by the schools.
How much can a student borrow?
Perkins loan awards have been averaging in the $1500 - $2500 range although higher awards are sometimes given to the most needy students. The amount that can be borrowed is determined by financial need, other financial aid being offered and availability of funds at the school.
How does a student apply for a Perkins loan?
As with all federal student aid, students apply for a Perkins loan using the Free Application for Student Aid (FAFSA). The schools where a student has been accepted will automatically assess the student’s eligibility for all financial aid and will send a financial aid award letter that lists the award amounts being offered for a Perkins Loan and other financial aid.
When does the loan have to be repaid?
There is a nine month grace period after a student graduates, leaves school or drops below half-time before repayment of the loan has to begin. During this grace period, no interest is accrued. Students are allowed up to ten years to repay the loan, depending on the amount owed.
Some fortunate borrowers will not have to repay all or a portion of their loan. This is possible for borrowers who undertake certain public, law enforcement, military or teaching service employment. Chapter Six in the FSA Handbook for Perkins Loans provides more details about loan cancellations.
Perkins Loan Tips
- FAFSA must be submitted early! – there is limited funding at each school and anyone missing the school’s deadline will not be considered.
- Students should borrow the maximum! - these loans offer the best terms available for a student loan.
Student Aid on the Web’s Campus-Based Aid Overview – Provides an overview of the Perkins Loan and other campus-based aid.
U.S. Department of Education’s Federal Perkins Loan Program Description
FSA Handbook for Perkins Loans - Provides specific details about Perkins loans.
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