What do you mean by Perkins Loan?
A Perkins loan is a form of financial assistance granted to post-secondary students via the US government's Perkins Loan Program. The federal program furnished need-based low-interest loans for undergraduate and graduate students to assist American students who exhibited exceptional financial need to complete their education.
The educational institution's formulated guidelines and based on these guidelines and information furnished by the student on the Free Application for Federal Student Aid (FAFSA) form, the authorities determined the student's need to avail loan facility.
Now-defunct Perkins Loans charged a fixed interest rate of 5% for the borrowers for the ten-year repayment period. In addition, there are various types of federal loans offered by the US government to students.
The example can be direct subsidised and unsubsidised ones, often popularly known as Stafford loans. After the US government decided to discontinue the program, Perkins loan expired in 2017, though the final disbursements were continued until June 2018. It distributed loans to about 5,00,000 students and 1,400 schools, and the final distributions of monies were made in June 2018.
Perkins Loan Program was started in 1958 and was named after Carl D. Perkins, who was earlier a member of the US House of Representatives from the state of Kentucky.
- A Perkins loan is a form of financial assistance granted to post-secondary students via the US government's Perkins Loan Program.
- The federal programme provided low-interest loans to undergraduate and graduate students who demonstrated extreme financial need to complete their studies.
- After the US government decided to discontinue the program, Perkins loan expired in 2017, though the final disbursements were continued until June 2018.
Frequently Asked Questions
How did the Perkins loan provide financial assistance to the students, and what was the borrowing limit of the Perkins Loan Program?
Generally, Perkins loans were provided via the financial assistance office of the educational institution that the students were attending. Either the student used to get the loan directly (mainly by cheque) or utilised the amount towards institutional charges and qualified educational expenses. The US federal government subsidised perkins loans. This meant that the government paid the interest accumulated on them when a student was pursuing their course. So, the actual lender was the school, and hence the student repaid the loan to the school.
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The borrowing limit of the Perkins Loan Program was based on the time when the student applied for the loan, the student's financial need, and the funding level of the concerned school. A student could borrow for each year of undergraduate study under the Perkins Loan Program up to $5,500 per year. Besides, for any graduate study or professional study, a student could borrow up to $27,500- $8,000. Furthermore, up to $60,000 could be borrowed for any undergraduate Perkins loans. However, the borrowers had to pay an interest rate of 5% for Federal Perkins Loans. Besides, the students must pay Perkins loan in the ten years post-graduation.
Except for the interest, there were no additional fees or costs linked with a Perkins loan. However, just like other loans, if a borrower fails to make a payment or the payment is delayed, they were likely to be charged with a late fee/collection cost, depending on the educational institution issuing the loan to the lender.
The students who had borrowed the loan were supposed to repay the loan nine months after they graduated or left school, or dropped before the half-time status.
The federal government stopped the Perkins loan program due to budgetary cuts. Not only those who favoured the cancellation of the federal loan were worried about the expense of the loans, but even those who wanted a more efficient federal student loan program.
How do borrowers repay a Perkins loan?
Though the federal government discontinued the loan program in 2017, there are still outstanding Perkins loans. Perkins loans comprise $1 trillion student loan debt owned by more than 43 million borrowers. Though the students (borrowers) are supposed to repay these loans in the ten years post-graduation, there are many other ways to pay them off. Firstly, if a student holds a Perkins loan, they should reach out to their school's loan servicer or the concerned University's financial aid office to know how to repay the loan. In addition, if someone is employed in a public-service-related job, as a government school teacher or nurse, they may be qualified to have their loans cancelled after specified years of duty.
Yet another alternative is loan consolidation. Individuals will have more repayment options depending on their income if they combine all their student loans, including the Perkins loan. However, Perkins loans do not qualify for the same repayment options as those who hold direct loans. Therefore, it is required to contact the school or University directly to pay off the Perkins loans.
Which Perkins loan borrowers are eligible for a forgiveness programme?
The borrowers who have taken Perkins loan might qualify for a forgiveness program if they are:
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- Early childhood tutor
- A worker at a child or family services business,
- A tutor at a tribal university/college,
- A librarian who possess a postgraduate degree from a Title 1 school,
- A firefighter in the military,
- Work in law enforcement,
- A nurse or medical technician,
- An early intervention services provider,
- An advocate serving as a public guardian (defender)
- A speech pathologist with a postgraduate degree at Title 1 school,
- A missionary with AmeriCorps VISTA or a volunteer with Peace Corps.
Who can qualify for 100% forgiveness under Perkins loan?
Noticeably, the loan amount eligible to be forgiven varies from person to person depending on the type of job and period for which one has been in that job. For instance, a borrower will be eligible for 100% forgiveness if:
- They are a special education teacher,
- They are employed in a school that serves low-income families and their children,
- They are teachers with expertise in math or science, as defined by a state education agency.
The information related to the percentage of funds that can be settled, acquitted, based on different criteria, including the type of job, duration of service, and other requirements, is available on the US Department of Education's Office of Federal Student Aid website.