perkins loan

The repayment of your federal Perkins loan begins only nine months after you graduate or drop out of college. The repayment period for Perkins loan is generally 10 years with the interest rates being lower than that of a private student loan basically because the Perkins Loan is a federally funded loan.

You have the flexibility of paying off your Perkins loan in a much shorter time period than your original loan term for no penalty. The minimum monthly repayment amount for the Perkins Loan is $40.00. Your repayment amount completely depends upon the amount of money borrowed as well as the borrowing period. There are also tax incentives that are available to qualified students which further deducts your Perkins student loan interest. If you have trouble making your monthly payments you also have the option to defer payment of your loan albeit in a few qualified circumstances.

Do note that if you fail to repay your loan according to the terms agreed during the loan sanction it will be considered as a loan default. If you are contemplating student loan default do consider all the issues that come up a student loan default. You will have to face and undergo severe consequences incase you do default on your student loan. Also in the case of default, your school will have every right to take action against you to recover the money from you. If you are unable to pay the loan for some time due to a genuine and unavoidable reason do talk it out with your school’s financial aid office. In most cases arrangements can be made with the school for a different loan repayment structure.

The Perkins loan is a sought after loan since it comes with many advantages such as lower rate of interest, federally funded, options to defer your loan, options for forbearance of your loan and finally options to cancel or forgive your Perkins loan completely, which is why students in large numbers apply for a perkins loan. However do ensure that your monthly loan repayments are done on time and in full to avoid going into a loan default situation.

The Federal Government will cancel your student loan under certain circumstances. This process is called loan forgiveness and to qualify for the loan forgiveness or loan cancellation you must meet certain set criteria. In short you must do one of the following

• Perform volunteer or military service
• Be a full time Teacher to a certain type of audience
• Practice medicine or
• Meet other criteria as specified by the loan program.

The Federal Government tries to balance the loan programs it runs with many benefits and loan cancellation options are one that make a federal student loans very attractive. So if you are filling out a Perkins loan application, bear this in mind. Since the Perkins Loan is a federal governmet funded loan, it comes with the same opportunites to cancel. One of the main advantages of the Perkins Loan is the wide range of opportunities that are available for the cancellation of the Perkins Loan.

Here are all the possible options yo have to cancel your Perkins Loan

Become a full time teacher

You are permitted to cancel a portion of, or the entire loan for services of teaching if you become an eligible teacher. This type of cancellation was introduced under The National Defense Education Act. This program lets you deduct 15% of your loan for the first and second year of teaching service. This percentage is then increased to 20% for the third and fourth and finally the remaining 30% of you loan is forgiven during your fifth year of teaching service.

Head start cancellation of the Perkins Loan

This type of cancellation is considered when the school you are enrolled in, closes unexpectedly. This may also be when you are in an approved leave of absence during the academic year.

Loan cancellation due to military services

You are entitled to partial cancellations (up to 50%) if you are serving for the U.S. Army in an area designated as a hostile area or in an area of imminent danger. Serve in the Army National Gaurd and receive $10000 towards your student loan repayment.

Volunteer service loan cancellation program

You can cancel your loan partially (up to 70 %) if you are serving under the Peace Corps service. 15% of your student loan is forgiven for each year of service upto a maximum of 70% of the total loan amount. Serve 12 months in the Americorps and get $7400 in stipends and $4725 towards your loan cancellation. Finally volunteer with VISTA (Volunteers in Service to America) and receive $4725 for 1700 hours of service.

Cancellation due to Total and Permanent Disability

In this case your loan will be cancelled in full only if you become disabled completely, after receiving the loan. Permanent and Total disability is the incapability to work and earn money or to attend school due to an impairment that is expected to continue with no definite end or to result ultimately in bereavement.

Cancellation due to Death

A loan is also subjected to cancel in full, in case of death, without burdening your heirs to repay the loan debt.

As you can see, there are many options to cancel your federal student loans and in particular your Perkins Loan.

You have basically two options if you are considering options that will help you stop repayment of your Perkins loan for the immediate short term. Do note that both options are temporary in nature. The two options are deferment of your Perkins Loan and forbearance of your Perkins Loan. You can receive a forbearance or deferment on your Perkins loan under certain conditions. If you are granted a deferment you can stop your loan payments with no accrual of interest or penalties. The process to apply for a deferment is through your school’s financial aid office. Do note to apply for a deferment in time or you might be hit with late charges.

Your second option if you are not approved for a deferment of your Perkins loan is to apply for a forbearance of your loan for a short period of time. During a forbearance your loan payments are reduced or postponed or in some cases your loan period is increased. Your loan interests however continues to accrue and you will be responsible to repay your accrued interests.

Obviously deferment of your Perkins Loan is a better option that forbearance but if push comes to shove a forbearance is always welcome. Now a Forbearance of your loan is not automatic either. The period of forbearance could vary anywhere between 12 months to 3 years. The process of applying for a forbearance is again through your school’s financial aid office. Do note that you have to have a valid reason to apply for forbearance and you will need to show documentation in your application.

Lastly, do continue to make scheduled loan repayments until you are informed that your deferment or forbearance has been approved. Just by applying does not mean you stop your loan repayments.

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.