The Perkins Student Loan is one of the most sought-after student aids provided by the federal government. Aside from the fact that this type of loan is purely need-based, with no credit checks whatsoever, it comes with low interest that is easy on the pocket and flexible repayment schemes that can come really handy at payback time.
If your family is already struggling to meet your daily living expenses, and you know that it will have extreme difficulty supporting your education, then you’re likely to be qualified for this loan. In quantifiable terms, this means this loan is for students whose parents are jobless or are earning less than $25,000 a year.
Need Based
Even if your parents are earning more, it’s still a good idea to apply for this loan if you think it will be hard for them to finance your education. Your loan reviewer will study your case and will analyze your expenses based on your specific needs. It’s a good idea to just apply for this loan and allow the loan review to determine if you qualify or not.
Perkins loan, named after Carl Perkins, a former lawmaker from Kentucky, is a low-interest bearing loan facility offered to neediest students, with no credit rating or cosigner required. It’s the next best thing to a scholarship grant, which is more difficult to come by.
As of academic year 2009-2010, undergraduates can borrow from Perkins $5,500 a year or up to $27,500 for an entire course. Graduate students can borrow $8,000 a year, or up to $60,000 for the lifetime of the course, including the undergraduate program. Your loanable amount will depend on the following conditions:
Timing of Application.
Fresh funds are allotted annually by the government to finance Perkins loans. The fund is slowly depleted every time a loan is approved. So it’s to your advantage that you apply for this loan as early as possible so you’ll be ahead in the list.
Your level of Need.
This is determined by your income and the budget of your parents or guardians. If your parents or guardians are jobless, or if their income is below $25,000 annually, then you can become a strong contender for this type of loan. Strong contender, but still uncertain. You need to show proof that you’re needier than the others.
Availability of Funds.
Schools are given a certain allotment to cover Perkins loan. You can apply for this loan on a first-come-first-served basis using your FAFSA application. Once this allotment is depleted, then your chances of getting this type of loan also diminish. If you can apply in the first two weeks of January, then by all means do it. That will be to your advantage.
Unlike most loans, a Perkins loan is coursed through your college’s financial-aid program. Although the loan uses government funds, the school acts as your lender and will release loan funds at least twice during the academic year, or it applies the loan to your school expenses.
Advantages
A Perkins loan offers many advantages. Aside from low interest, it provides concessions and flexibility for different circumstances affecting a student’s ability to repay the loan. For one, you’re allowed a window of up to 10 months after graduation before starting your monthly payments. A private loan provider is already generous if it agrees to give you six. A summary of these advantages follows:
- No insurance or loan origination fee
- Nine-month windows before repayment
- Open to loan condonation or forgiveness options
- Only 5% interest rate
- 10-year repayment period
The loan is granted to the student and not to the parents. This helps ease the burden of parents, especially if they are no longer as productive. With many parents now being retrenched or forced into early retirement due to poor economic climate, it’s in their best interest to allow their children to take over. After all, a college graduate will eventually be in a better position to pay for a loan.
Deferment
Every effort should be made to have your loans paid according to the original schedule of your signed agreement. This good credit practice will assure the continuity of this program and send more youths to college. Moreover, this will help you establish your credit rating and open more doors for loan options for work and investment purposes in the future.
But there are also some harsh realities out there that somehow affect your paying power, no matter how good the intentions you may be. With Perkins, you have adequate protection against such possibility, without having to pay more for interest charges and late payments.
All you need to do is to apply for loan deferment, a temporary suspension of loan payment for a specific situation and for a specific timeline. You can apply for this if your situation falls under any of the following circumstances:
- Attending school at least halftime
- Unemployment of up to three years
- Approved graduate school fellowship or rehabilitation if disabled
- Economic hardship up to three years
Forbearance
Forbearance is another option that is open to you in case you encounter economic difficulty when repaying for your student loan. Under forbearance, you also ask for deferment of payment, but this time you need to pay the accrued interest during the suspended period. You can avail of forbearance if you find yourself in any of the following situations while still paying for your federally-funded student loan:
- Unemployment
- Partial disability
- Other documented hardship
These types of the deferment options are available for all federally-source student loans.
Forbearance does not affect the interest rate of your loan, but you’ll need to pay interest for the period when payment for your loan was suspended. If your forbearance application has been approved for an extension of six months, for example, this means you don’t have to pay for the next six months, but interest charges for those months will apply to your loan upon resumption of payment.
Forgiveness
If you’re having second thoughts about taking out a federal loan, specifically Perkins, wait until you read about this one.
Under certain situations, the federal government can be really generous in giving you real, honest-to-goodness free education under a practice known as “loan forgiveness.” Below is a list of scenarios that can entitle you to “loan forgiveness”:
- Perform volunteer work
- Join the military service
- Teach in special communities
- Practice nursing or medicine in specific communities
If you’re civic-minded and you love your country – which you should anyway – this is no sweat. After all, this may be just the thing you always wanted to do. The U.S. Department of Education has a list of organizations that you can join to both serve others and to pay for your school loan.
If you join Americorps as a volunteer for 12 months, you get a stipend and $4,725 to be used towards your loan. As a Peace Corps volunteer, you will find fulfillment working with real people in 70 developing countries across the globe and earn 15% loan forgiveness for each year of service. If you join Volunteers in Service to America (VISTA) for at least 1700 hours, then you also get the satisfaction of helping other people, receiving a regular a stipend, and $4,725 for your college loan.
The U.S. military is also a haven for people seeking loan forgiveness. In fairness though, many young Americans join the military not for free education, but for their genuine desire to serve their country with courage and honor. Undeniably, however, the military is a rich resource for educational opportunities, including $10,000 in student repayment benefit.
Tribute loans
Perhaps forgiveness is not the right word for this. Tribute is more like it. The government pays tribute to our civic-minded and valiant men and women in terms of granting them better educational opportunities in recognition of the service and sacrifice they make for love of God and country.
Federal funded educational benefits and loans are a tribute to hundreds of full-time teachers serving elementary and high students in remote communities across the United States. If you’re in this field, you can request your school’s financial aid office for this benefit and accept your tribute from the rest of the American public.
No Free Loader
Federal loans are open to many possibilities to help you finish your college education without causing too much pain on your pocket. You just have to know what they are. For all you know, your desired career path leads to free education.
You’re no freeloader if you wish to apply for these benefits as long as you pay your taxes, take your college education seriously, and make a firm resolve to help others when you graduate from college.
If you’re not paying your taxes yet, your parents are – and they continue to pay their share of taxes to make affordable college education possible. This is what federally-supported education is all about. It doesn’t make us equal in terms of material wealth, but it democratizes our access to a wealth of opportunities through education.
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