Perkins Loans Tips
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Importance of Paying Off Perkins Loans
The Perkins Loan used in financing college is more important than most people realize. This loan provides something that benefit's the majority of college students, a low-interest source of funding for higher education.
What few people realize is that part of the next year's Perkins Loan Program is funded by the money you pay back on your loan now. So when a borrower fails to pay back their loan and defaults, that makes less money available to students applying for aid the following academic year.
It may sound corny, but by being responsible and paying your loans back promptly, you are actually helping students who are currently in the position you just occupied. This is one very important way that students can help each other to deal with college expenses.
It may not seem like it would make much of a difference, but monthly payments from hundreds of thousands of students each year really does add up. It is only fair that everyone do their part.
Postponing Payments on Your Perkins Loan
If you are having trouble meeting the required payments each month on your Federal Perkins Loan you may be able to postpone them for a while. This would give you enough time to organize your financial situation in order to successfully resume paying off your loan.
There are two options for postponing payments. The first is called deferment. In this case, your payments are temporarily postponed and no interest accrues on your account. This is not an automatic fix, however. You must apply for and be granted a deferment by your school or the company employed to manage your loan.
This can be requested during times of active military service in a war, in the event of being unable to find full-time employment, proven economic hardship (including Peace Corps Service), or if you return to a college or graduate school in at least a half-time capacity. Deferment can extend up to three years.
Forbearance is the next option if you do not qualify for deferment. Under this method, you can reduce or temporarily postpone payments, however, interest will continue to accrue on your principal loan.
If approved, forbearance may be granted in intervals of up to 12 months for no more than three years. The borrower must also provide documentation of the need to use this option.
Change Your Mind About Your Perkins Loan?
Sometimes you may receive other forms of college funding after you have already been approved for a loan. Now you would rather cancel the loan so you do not have to pay it back with interest later. With the Federal Perkins Loan Program that is not a problem.
Even if you have signed the promissory note agreeing to the terms and conditions of the loan, you still have options. When crediting your account with funds from a Perkins Loan, the school is required by law to provide you with written notice. This must be given to you within the 30 days prior to and after the loan disbursement.
Once you have received this notice, you have either 14 days from the date it was mailed or until the first day of the payment period to return it to your school and reject the loan. The school will notify you of the first day of the payment period.
If the funds are not sent to the school, but rather sent to you by check, the answer is simple. All you have to do to refuse the loan is return the check in the mail. As long as you take these steps within the required time frame you are not locked into anything.
Perkins Criteria
In order to qualify for a Federal Perkins Loan, a student must meet certain criteria. He or she must be planning to or currently enrolled in one of the more than 1,800 eligible academic institutions throughout the country.
Students wishing to obtain the Perkins Student Loan must also be U.S. citizens, permanent residents of this country or have eligible non-citizen status. Contact your school for the requirements for determining eligible non-citizen status.
Satisfactory academic progress toward a degree, monitored by the school, must be maintained in order to keep the Federal Perkins Loan. There must also be no outstanding or unresolved defaults on other student loans.
Assuming the student meets all of the above requirements, he or she must file a Free Application for Federal Student Aid (FAFSA). The participating school will then determine if you are eligible for this loan based on your level of financial need. The greater need you display the more you may receive.
Campus-Based Aid
The Federal Perkins Loan Program is considered campus-based financial aid. This is because even though the money is provided through a federal loan it is managed by the participating college or university.
The funds are provided by federal and school contributions as well as payments collected from previous years' loans. How that money is distributed to you is up to the individual academic institution.
Your school's financial aid staff will factor in your Expected Family Contribution (EFC), scholarship and grant money, other need-based assistance and the availability of program funds at your school. They will then determine how much to award you in Federal Perkins Loans and how to distribute that money to cover college expenses.
If you have an outstanding balance with your school they will most likely apply the money directly to that. If there is no outstanding balance you may receive a check for the loan.
The Perkins Loan will be broken up into two disbursements throughout the academic year. Check with your financial aid adviser about these dates so you know when you will receive this money and then plan around this information.
Forgiveness is a Virtue
Your Federal Perkins Loan may be forgiven depending on your profession post-graduation. This means that the loan will be partially or fully cancelled, thus reducing your financial obligation or ending it altogether.
Elementary or secondary school teachers who work in areas designated for low-income families are eligible for Perkins Loan forgiveness. Teachers working in special education or fields designated as teacher shortage areas like math, science and bilingual education are also eligible to have their Perkins Loan wiped clean.
Various professions within the medical field and law enforcement, including military service qualify too.
To be considered for having your Perkins Loan forgiven you may have to commit to working in one of these areas for a certain amount of time, usually between three and five years.
If you plan to teach or practice medicine in inner city communities or are interested in law enforcement than this is a good option. You can save money by following your chosen profession. That money is then reintegrated into the loan program for future students. That is a pretty attractive offer.
Check online or speak to an adviser to see what professional fields qualify for forgiveness and you just may save a pretty penny.
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| Jennifer Mathes, Ph.D. |
