Federal Aid

The first question that pops up into the mind of a prospective student is if he or she is eligible for financial aid such as federal student loans or grants. Just so we are clear, we are specifically talking about government financial aid such as Stafford loans, Perkins loans or grants such as Pell grants etc.

The conditions or requirements to be eligible for financial aid are pretty straight forward.

1. Be a U.S. citizen or an eligible non U.S citizen such as a permanent resident.
2. Demonstrate a financial need. Fairly obvious requirement. You have to show a need for financial aid to be able to receive a student loan or grant.
3. Be currently enrolled or have secured admission to an eligible education institution in an approved associate, bachelor or graduate degree program.
4. At the very minimum you must have a high school diploma or it’s equivalent such as a GED certification or you could simply pass a test that is approved by the Department of Education.
5. Once you are in school you must maintain a satisfactory level of academic progress as determined by your school.
6. You must continue to maintain your status as a full time student.
7. Federal financial aid is to be strictly used for educational purposes only. A condition for receiving financial aid from the government is to certify that you will use the money from the student loan or grant strictly for educational purposes only.
8. You must have a valid Social Security number. The only relaxation to this rule is if you are from the Federated States of Micronesia or the Republic of Palau or the Republic of the Marshall Islands.
9. Absolutely no prior defaults on any federal student loans. You cannot be applying for a grant or a student loan when you already owe money and are in default on a previous loan.
10. You must not be convicted under the state or federal law for selling or possessing illegal drugs.
11. Finally if required to then comply with the Selective Service registration.

That’s pretty much it. If you satisfy the above requirements then yes, you are eligible to receive federal aid towards your education from the government. The next step in the whole financial aid process is to understand all the different options available to you to help finance your education.

We always recommend that you start with scholarships and grants. Scholarships and grants do not have to be paid back and this makes it very attractive to students. It is important to explore all scholarships and grants early to give yourself the best possible chance to secure aid. Only when you have exhausted all options do you then work your way down to federal student loans such as Stafford loans and PLUS loans. You also have the choice of applying for a Perkins Loan but make sure you check first if you are eligible for a Perkins loan. Finally your last option should be to shop around for a private student loan.

The Perkins loan is a federal funded loan that both undergraduate and graduate students can apply for showing extreme financial need. The loan administration is unlike the Stafford Loan or the Parent PLUS loan, the Perkins loan is administered through your schools financial aid office. The school in turn is funded by the Federal Government with funds made available for the disbursement of the loan.

You will find that the school or university will pay you directly via a check or apply the funds to any outstanding school or university charges. Before we get to the application process, do remember that the maximum limit for a Perkins Loan to an undergraduate student is $4000 for each year of undergraduate study with a total maximum of $27000 and the maximum limit for a graduate student each year is $8000 with a total maximum for all years limited to $60000.

How Do I Apply For A Perkins Loan?

Now to the actual application process. The Perkins Loan application, like application for any other kind of federal financial aid, begins with the submission of the Free Application for Federal Student Aid (FAFSA). This is the start of the application process and the FAFSA application aims to assemble your family’s financial information in a way that helps determine and assists in the actual calculation of financial need. The loan amount you are approved for are based on the FAFSA application since it states the exact nature of your current finances and need.

When Do I Apply For A Perkins Loan?

Remember that the Perkins Loan is processed through the financial aid office at your college or university. It is advisable to submit the FAFSA as early as possible, but not before January 1st of the year you are planning to start college. You have the choice of applying online and in my opinion this is better as the help and instructions available online are elaborate and walks you through the process. Apart from the ease, the loan application process is quicker as well and the response to your Perkins loan application is also quicker. If you infact decide to apply for your Perkins loan online, do remember to print yourself a copy of the loan application for your records.

Once you’re done with your FAFSA, you will be given a Student aid report (SAR) which will tell your expected financial contribution (EFC) and also finally declare whether you are eligible or not. Once your college goes through your FAFSA and offers you a package of financial aid that will include Perkins Loan, you may have to fill out a Perkins loan application.

Finally do note that the Perkins Loan does not carry any guarantee and is approved only for students that have demonstrated extreme financial need in their FAFSA application. Also remember that there are no charges or any kind of origination fees for the Perkins loan.

Perkins Loan is a school or campus based student loan program that is administered by the school with the Federal government providing the school with the funds for the loan. Perkins loans are awarded to both graduate and undergraduate students and is only done when there is an extreme financial need on the part of the student. Quite a few students rely on financial assistance and Perkins loans come in handy to those that are in dire financial need. This Federal Aid Program from the Federal Government is primarily to ensure American college students are able to complete their post-secondary education by providing much needed financial assistance.

A good thing about the Perkins Loan is that the grace period fees and the repayment options are extremely flexible. Also the cancellation or forgiveness policies for a Perkins loan is much better when compared to a Stafford Loan.

Perkins Loan Borrowing limits

The limits of a Perkins loan is determined by the school administration at the time of application. That said, graduate students are provided with as much as $8000 a year and with $60,000 as the lifetime limit where as the undergraduate students can be provided a maximum of $5,500 a year with a lifetime limit of $27,500.

Perkins loan comes with a low-interest rate of 5%; you can opt for this loan as there are hardly any fees to be paid other than this interest. You will be provided with a grace period of nine months, for repaying the loan. The best part of a Perkins loan is that while you are enrolled in college the federal government will pay the interest of the loan for you. You will be given 10 years to pay back the loan.

Perkins Loan Eligibility

You must attend a college or a university that has applied and been granted allocation of funds for the Perkins Loan to be eligible. You must also be able to demonstrate extreme financial need in your application. Students need to file their Free Application for Federal Student Aid to ascertain their financial need. It is also essential to submit your FAFSA as early as possible as the colleges have limited funds.

Perkins Loan Application

Perkins Loan is available in 1,700 colleges worldwide. While hunting for colleges or universities, keep in mind to make sure by checking with the school’s financial aid department if the Perkins Loan is available or not.  It is necessary to submit a completed FAFSA to be considered for the Perkins Loan.  You must have and demonstrate financial need in your FAFSA application and the severity is determined by the school administration.

The Stafford Loan, designed by the Federal Direct Student Loan Program (FDSLP), is a student loan that is offered in institutions of higher education. There are two variations, the FFELP or the Federal Family Education Loan Program and the FDSLP or the Federal Direct Student Loan Program.

The Family Education Loan Program loans are loans that are provided by a few loan associations and are guaranteed by the federal government. On the other hand, the Federal Direct Student Loan Program loans, better known as ‘Direct Loans’, are loans provided to the students as well as their parents directly by the US Government.

Any Stafford loan is either unsubsidized – which means that you have to pay all of the loan interest either at that time itself or have it put off until after you graduate, or subsidized – which means that the government takes care of paying the interest as long as you’re still at school.

Subsidized Stafford Loan

This loan is basically designed for students with financial requirements. The amount you can borrow is administered by your school itself, which will also overlook into the Free Application for Federal Student aid (FAFSA). So, even if you run short of money, you can always put the money you have into the certificate of deposit (CD) and earn interest. You needn’t worry about the interest (that is low), as you will be able to meet your needs by the time you close out the CD.

Unsubsidized Stafford Loan

For this type of loan, any student irrespective of need is eligible. Here, your school administers the amount that is required and the interest is counted from the first day that the money is sent. You can put off your payments until graduation by capitalizing the interest i.e. increasing your loan cost by adding interest payments to your loan balance. The interest never goes beyond 7% during the loan period.

Stafford loans Limits

There are certain limits pertaining to Stafford loans regarding the amount to be borrowed, applicable for both subsidized and unsubsidized loans. These loans vary by each year in school.

Stafford loans Interest Rates

The interest rates of Stafford loans are decided and fixed by the government. And most importantly, unlike a private student loan, the interest rate does not vary with your credit score.

Stafford Loan Eligibility

One must have completed the Free Application for Federal Student Aid (FAFSA) to attain the loan. This is mandatory for both subsidized and unsubsidized loans.

Stafford Loan Application Procedure

Stafford loan application starts with the FAFSA form. Fill out your FAFSA and submit it. You can use the Lender Codes Database (Lender Code is a six digit identification number assigned by the US Department of Education to lenders participating in the Title IV higher education loan programs) to find the lender codes of participating student loan providers. Keep in mind that if you are attending a school participating in the Federal Direct Loan Program, then you do not have to take your federal student loan funds from private lenders as your school will obtain them directly.