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Student Loans – The Perkins Loan

Published on December 14, 2012 by   ·   No Comments

StudentHow can you apply for a Perkins loan?

In order to apply for a Federal Perkins Loan you need to complete a Free  Application for Federal Student Aid (FAFSA) and a Master Promissory Note (MPN).  The MPN is a legally binding document showing the borrower owes debt to a  school. The note includes information about the interest rate on the loan, the  repayment plan and minimum rates of repayment; circumstances for deferment and  forbearance, cancellation provisions; credit bureau reporting; late charges,  attorney fees, collections costs, and default consequences.

The Perkins Program includes the Federal Perkins Loan, National Direct  Stu­dent Loans (NDSLs) and National Defense Student Loans (DL). No new DLs  were made after July 1, 1972, but there are some still in repayment. A Perkins  student loan must be used only for educational expenses.

What students are eligible?

This program is for students in financial need in order to help them finance  postsecondary education at low interest rates (the interest rate for PLs and  NDSLs is 5% per year).

What are the maximum loan amounts?

The annual limits are $5,500 for undergraduate students and $8,000 for  graduate students. The aggregate maximum loan is $11,000 for undergraduate  students (Grade levels 1&2), $27,500 for undergraduate students (Grade  levels 3&4) and $60,000 for graduate students.

Who is the lender?

Perkins student loans are given out by the roughly 1,700 participating  postsecondary institutions. The school’s loan fund is replenished by collections  on outstanding loans made and reimbursements from the US Department of Education  for expenses in relation to certain statutory loan cancellation provisions.

How can you apply?

In order to apply for a Federal Perkins Loan you need to complete a Free  Application for Federal Student Aid (FAFSA) and a Master Promissory Note (MPN).  The MPN is a legally binding document showing the borrower owes debt to a  school. The note includes information about the interest rate on the loan, the  repayment plan and minimum rates of repayment; circumstances for deferment and  forbearance, cancellation provisions; credit bureau reporting; late charges,  attorney fees, collections costs, and default consequences.

What are the advantages?

The advantages of such a loan are that there are no insurance or loan  origination fees to pay, there is a nine-month grace period (while for other  federal loans it’s generally six months), there is only 5% interest rate and the  repayment period is pretty long (10 years). Moreover, Perkins Loans are eligible  for cancellation for teachers in designated low-income schools, as well as for  teachers in designated teacher shortage areas such as math, science, and  bilingual education. You can also cancel your loan if you are a Peace Corps  Volunteer.

 

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