Federal Perkins Student Loans...
Your (Almost) Lowest Federal Interest Rate

Federal Perkins student loans are often given to Pell grant students to relieve problems caused by student loan debt.

But, because schools contribute at least one-third of the government's appropriation for these loans, they are the ones who decide which of their students to award these funds to.

Usually if you qualify for a Pell grant, but you still need additional funds, you will be awarded a Perkins loan. These loans have low interest, easy repayment and may be forgivable.

Each school has its own 'packaging philosophy'.

Their decisions about awarding Perkins loans will depend on these factors:

• the amount of funding the school is entitled to under the federal formula
• the amount of other money the school has to distribute
• the amount of outside college grants and scholarships students bring with them

• the level of unmet need for students in any given year
• the official posture of the school towards college loans

Perkins loans have a fixed rate of 5%.

This compares favorably to unsubsidized Stafford loans at 6.8% and Direct PLUS loans for graduate students and parents at 7.9%. (Subsidized Stafford loans were reduced July 1, 2010 to 4.5%. Next year they will go down to 3.4%, but after that they will revert back to 6.8%.)

There are no more FFELP loans- all federal loans except for Perkins loans are federal Direct student loans.)

The Higher Education Opportunity Act (HEOA, August 14, 2008) increased the Perkins loan limits. They are now $5,500 per year for undergraduates (up from $4,000) and $8,000 per year for graduate students (up from $6,000).

- There is a lifetime limit of $27,500 for undergraduates and $60,000 (including undergraduate loans) for graduate students.

- Repayment starts after a 9 month grace period when you leave school.

- Payments are made to your school, not the government.

- Federal Perkins student loans can be consolidated into the Direct loan program as long as at least one of the loans consolidated is a Direct or FFELP loan. (Check the student loan consolidation calculator to see if your interest rate can be lowered by doing this.)

- Perkins loan forgiveness is available for Perkins loans.

- In order to qualify for the income-based monthly payment formula, Perkins loans must be consolidated under the Direct Loan program.

- Perkins student loans are subsidized loans. Interest is paid by the government until repayment starts.

• However federal Perkins loan changes have been made this year that will impact the way interest is calculated on these loans.

Also, forbearance requests do not have to be made in writing, anymore.