The E-Z Guide To Student Loans (Perkins Loan)

The Federal Perkins Loan is another type of student loan that is subsidized by the government, meaning interest on the loan does not begin accumulating until you're required to start repaying. This type of loan is very appealing for a number of key factors:

  • It carries a fixed 5% interest rate for the 10 year repayment period.
  • There is a 9 month grace period for this loan (meaning, you are given 9 months before you are required to start repaying after graduating, falling below half-time status, or withdrawing from your college or university).
  • The loan is subsidized by good ol' Uncle Sam until you're required to start repaying. Which means the government picks up the tab on the interest accrued during your college attendance.
  • This loan is eligible for Federal Loan Cancellation, which essentially means that if you go into one of the eligible fields of work designated by the Federal Loan Cancellation guidelines, then your complete loan or a percentage of your student loan will be canceled.
  • There are no fees associated with this type of loan.
The downside of this student loan is that in order to qualify you must fall into the federal "financial need" framework. Basically saying that your tax bracket decides whether you are eligible for this type of student loan or not.

With this type of loan, your school is your lender. Which means your loan amount is actually repaid to your school and is then reinvested into your schools revolving loan fund.

The amount of loan you could barrow is also limited. You are allowed to borrow up to five thousand and five hundred dollars ($5,500) for each year of undergraduate study. However, the total amount of you can borrow as an undergraduate is $27,500. Students doing graduate studies could borrow $8,000 per year. The combined total of your undergraduate and your graduate studies student loan cannot exceed $60,000* combined.

*As of the date of this article.

If you're eligible for this type of student loan, this should definitely be the first one you should look in to. Always remember, student loans are NOT FREE. You will have to pay them back with interest sooner or later, so try to be conservative with regards to how much you're borrow and what type of loan you're committing yourself to. There's drove of people out there with mountains of student loans that they can not overcome.