Federal Perkins Loans
The federal government created the Perkins Loan program to provide student loans for college students with more than average financial need. Where a Stafford Loan or Parent PLUS Loan is available to just about any college student, a Federal Perkins Loan is only available to students who can expect only a minimal level of financial support from their families and own work.
To determine your eligibility for a Perkins Loan (and other financial aid programs), you'll need to complete the Free Application for Federal Student Aid (FAFSA). During the application process, you'll be asked about your financial situation, as well as your parents'. That information will be used to determine if you meet the Perkins Loan eligibility requirements for this year. The FAFSA will also be used to decide the actual amount of money you can borrow through the Perkins Loan program. As an undergraduate, you can receive up to $4,000 for each year you are enrolled. If you are in a program requiring more than four years of undergraduate study, it's important to be aware that the total amount you can borrow through the program is $27,500.
Unlike other federal student loans, there are no fees associated with a Perkins Loan. Most lenders charge an origination fee as part of offering you a student loan, like a Stafford Loan. However, due to the Perkins Loan program's intention to make student loans available to students with extreme needs, such fees have been eliminated. You will still be charged interest on a Perkins Loan, although the government subsidizes Perkins Loans by paying for your interest as long as you're still in school. Once you've graduated or otherwise dropped below half-time enrollment in school, you have a nine-month grace period before you will be required to start making payments on your Perkins Loan.
By the terms of the Perkins Loan program, you must repay any money borrowed through a Perkins Loan within ten years. The federal loan program also sets minimum payments at $40 per month, although they can be significantly higher, depending on the total amount of your loan. You can qualify to have your Perkins Loan obligation canceled or discharged entirely after your graduation in certain situations, such as becoming a full-time teacher at a school serving low-income families. Certain professions and programs also provide partial cancellation. While other federal student loans are eligible for some cancellation programs, Federal Perkins Loans qualify for many more of the loan cancellation programs currently available.