Federal Perkins Loan In USA

Federal Perkins Loan In USA

Federal Perkins Loan is a low-interest loan for both undergraduate and graduate students. The interest rate for a Perkins loan is 5%. Your school is the lender. The loan is made with government funds, and your school contributes a share. Repay Perkins loans to your school.A Federal Perkins Loan, or Perkins Loan, is a need-based student loan offered by the U.S. Department of Education to assist American college students in funding their post-secondary education. The program is named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.

Perkins Loans carry a fixed interest rate of 5% for the duration of the ten-year repayment period. The Perkins Loan Program has a nine-month grace period, so that borrowers begin repayment in the tenth month upon graduating, falling below half-time status, or withdrawing from their college or university. Because the Perkins Loan is subsidized by the government, interest does not begin to accrue until the borrower begins to repay the loan. As of the 2009-2010 academic year, the loan limits for undergraduates are $5,500 per year with a lifetime maximum loan of $27,500. For graduate students, the limit is $8,000 per year with a lifetime limit of $60,000 (including undergraduate loans).

Perkins Loans are eligible for Federal Loan Cancellation for individuals choosing to work in a number of different public service occupations including early childhood education, elementary and secondary school teaching, speech therapy, nursing, law enforcement, librarian, public defense attorney, fire fighting and certain active duty military postings.Depending on the field of employment, further restrictions on the setting of employment may apply. For example, forgiveness for teachers may be restricted to designated low-income schools or specific teacher shortage areas such as math, science, and bilingual education and forgiveness for nurses requires employment at a non-profit medical facility. A percentage of the loan is cancelled for each year spent teaching full-time(as long as the loan remains in good standing). This cancellation also applies to Peace Corps Volunteers. Cancellation typically occurs on a graduating scale: 15% for year 1, 15% for year 2, 20% for year 3, 20% for year 4, 30% for year 5. These percentages are based on the original debt amount. Thus after 3 years of service, one would have 50% of their original debt cancelled.
The Federal Perkins Loan program is set to expire on September 30, 2017, this is an extension to an earlier program expiration of September 30, 2015. The extension was made possible by the General Education Provisions Act (GEPA), however this act also prohibits any further extensions of the Perkins Loan Program.
The Student Loan Ranger writes a lot about federal student loan programs, but tends to focus on the big ones, such as Stafford and PLUS loans. This week, we will shine the spotlight on a lesser known, but no less important, federal program – the Perkins loan.
Depending on what Congress does in the next few weeks, one might consider this our eulogy to a program that’s helped around 30 million needy students in its 57-year history.

Perkins Loan Basics:-About 1,700 higher education institutions participate in the federal Perkins Loan program. Only students with exceptional need may receive a Perkins loan. As every school has a different amount of revolving Perkins loan funds available, the income threshold defining eligibility will vary.Funding for new loans comes in part from federal budgetary appropriations, collection of existing loans and funds from the participating schools. For the last few years, the program has made loans to about 500,000 undergraduate and graduate students per year, with an average amount of about $2,000.Undergraduate students may receive up to $5,500 in Perkins funds per year with an aggregate maximum of $27,500, while graduate students are potentially eligible for up to $8,000 per year with a maximum, including undergraduate amounts, of $60,000. To be eligible for a Perkins loan, a student must be attending a graduate or undergraduate program on at least a half-time basis as defined by the school. Some less-than-half-time students are eligible for Perkins loans, but they are not eligible for an in-school deferment.

These loans have a low fixed rate of 5 percent with no interest accruing while the student borrower is at least half time in school, in deferment or in their grace period. In most cases, the grace period is nine months from the time the student becomes less than half time in school, and the repayment term is ten years.Perkins loans are eligible for various deferments for things such as unemployment or illness – but these policies vary by school. Repayment schedules are set up to ensure the loan is paid off within 10 years, and payments can be required monthly, bi-monthly or quarterly depending on the school. One of the reasons these loans are so important to needy students is the generous and varied forgiveness programs that are unique to the Perkins program.

Winding Down:-So now that we’ve explained all the benefits of the Perkins program, let’s talk about why it’s – maybe – going away. In short, it’s a budget issue.For a few years now, there’s been a lot of talk about how complicated the federal aid programs are, both to families and to college aid administrators. Many feel that the Perkins program serves roughly the same student populations as other programs, such as the subsidized Stafford loan or Pell Grants.

Ceasing new funding for Perkins would free up federal ppropriations and overall operational costs that could be funneled to other programs. Those against the termination of the program argue that Perkins provides the extra funds needed for these exceptionally needy students to pay for college, and that to date there is no legislation that would repurpose those funds to fill the gap.

The statutory authority to use appropriated funds for the Perkins loan program expires on September 30, 2015. This means that unless Congress does something between now and then, which is close to impossible as of the writing of this blog, schools will be prohibited from making new Perkins loans to students who have not received them prior to Oct. 1, 2014.This means that if you’ve never received a Perkins loan in the past, and don’t receive at least a disbursement before the deadline, you won’t be able to receive them at all. If you have received them in the past, you’ll be allowed to continue to do so until you complete your program at your existing school.Those with existing Perkins loans, however, can rest assured that existing repayment, deferment and forgiveness options will not change, although the loan holder may change to a Department of Education servicer at some point in the future.

It’s Not Over Until It’s Over:-Thanks to significant activity from school and student groups, it’s still possible the program could be saved or at least extended. Last week, House Rep. Mike Bishop, R-MI, and Rep. Mark Pocan, D-WI, introduced the Higher Education Extension Act of 2015, which passed the House on Monday and extends the program for another year. A bipartisan group of senators from the Senate Health, Education, Labor and Pensions Committee quickly followed the introduction with a resolution showing support for the program’s extension.We’re guessing that the late Rep. Carl Perkins, the program’s namesake, who before his sudden death had a significant impact on both education and the needy, is watching and hoping his legacy will continue.Betsy Mayotte, director of consumer outreach and compliance for American Student Assistance, regularly advises consumers on planning and paying for college. Mayotte, who received a B.S. in business communications from Bentley College, responds to public inquiries via the advice resource “Just Ask” and is frequently quoted in traditional and social media on the topics of student loans and financial aid.

Applying for a Federal Perkins Loan:-A Federal Perkins Loan is a 5% fixed interest rate loan for undergraduate and graduate students with exceptional financial need. Because of its low interest rate, need-based award, and generous cancellation policies, it is one of the most affordable options for students in postsecondary education.Unlike for other types of federal loans, such as the Federal Stafford Loan and Parent PLUS Loan, the school is your lender for Federal Perkins Loans. Approximately 1,800 participating postsecondary institutions offer the Perkins Loan.

Eligibility:-The following conditions are required to be eligible for Federal Perkins Loans:

    Enrollment in an eligible school at least half-time for a degree program
   US citizenship, permanent resident, or eligible non-citizen status
   Satisfactory academic progress
    –No unresolved defaults or overpayments owed on Title IV education loans and grants
   Satisfaction of all Selective Service requirements

If you meet all of the above criteria, financial need is determined by the US Department of Education, using the information you provide on the FAFSA. Factors that can influence your eligibility are:

   Student’s income & assets
   Parent’s income & assets
    Household size
    Number of family members (excluding parents) attending postsecondary institutions

The maximum amount that you can receive based on this formula is capped to:

   Undergraduates: up to $5,500 a year (up to $27,500 for entire undergraduate schooling)
   Graduates/professional students: up to $8,000 a year (up to $60,000 for entire graduate schooling)
   Non-undergraduate or non-graduate/professional student: up to $11,000 for entire schooling

Content Credit :- tubidy

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