Senin, 05 November 2012

Student Loans - The Perkins Loan


How 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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