Perkins Loan

Taking on a Perkins Loan to Pay for College

 

Many college students would not be able to attend school were it not for financial aid. A lot of these students don’t qualify for grants or scholarships, and they are forced to take out student loans. Fortunately, there are a lot of great programs for affordable loans.

The Perkins Loan is one that comes with a very low interest rate of five percent. It is given to students who have the highest need for financial aid, a decision which is at the discretion of the college itself.

Here’s how it works. Your college or university will decide who is eligible for a Perkins Loan. If you have a significant need and apply early by filling out your FAFSA as soon as possible, then you may be selected. The government then gives money to the school, who credits it toward your tuition and other fees on your behalf. If you are an undergrad, you may receive up to $5,500 each year.

Once you are approved for the loan, you will have to sign a Perkins Loan MPN, or Master Promissory Note. This is a contract between yourself and the Department of Education that says you promise to pay back the money you borrow, plus the low five percent interest rate. Once you sign the MPN when you first get the loan, it will apply to the subsequent years as well.

One of the best things about a Perkins Loan is that it allows you time to find a job and get situated financially after you graduate college. Undergrads have a nine month grace period after graduation, meaning they don’t have to make any loan payments during this time. This should be plenty of time to find a job and get on your feet. Once you start making your payments, you must make them for the full amount and on time each month. If you have late payments or skip one altogether, there will be fees to pay.

If you are responsible with the repayment of your loan, however, the low interest rate will enable you to pay it off more quickly than you may have been able to if you had taken a bank loan at a higher rate. Those who end up in military, public, or teaching service positions may enjoy the opportunity to have part or all of their loans paid off for them.