Who Is the Lender for Federal Perkins Loans?
Posted on | May 30, 2012
A Federal Perkins loan is a type of student loan that is partly subsidized by the government and administered by the school with whom the funds are granted. Therefore the short answer to the title question is the school with whom the funds are granted by the federal government. This article will discuss how the Federal Perkins Loan works and what it means to have the school itself as the lender.
FAQ: Federal Funding
The federal government includes in the general appropriation act thru the education department’s budget, an item to be specifically allocated for the Federal Perkins loan. Once the budget is released to the proper departments the exact amount allocated is made available to accredited schools for discretionary disposal, subject to minimum guidelines, such as actual financial need, priority given to Federal Pell Grant recipients, required half time status (at least), etc.
FAQ: Federal Subsidy with Institution Contribution
A very important point to remember is that the Federal Perkins Loan program is only partially subsidized by the federal government. This is because the qualified school or institution usually matches the contributions allocated. Not to mention the fact that repayments made are applied to funding Perkins loan grantees.
FAQ: Program Description
The Federal Perkins loan program has at least 1,800 eligible institutions scattered throughout the United States territories. These institutions choose from low income student applicants based on minimum requirements, first come first served, academic achievement, etc. Stated simply, for so long as the institution follows minimum requirements set by the federal government they are free to provide for additional requirements for screening and qualification.
FAQ: Loanable Limit
The loan limit depends on the actual need of the grantee minus other subsidies granted. Stated differently the loanable amount will not exceed the actual needs of the grantee taking into consideration other grants given (i.e. Stafford loans, Plus loans, private scholarship programs). As a general rule the loan limit for:
- Undergraduate studies: $4,000 per year, not to exceed $20,000 in total
- Graduate studies: $6,000 per year, not to exceed $60,000 in total taking into consideration the undergraduate total.
FAQ: Grantee Qualification
Not every student who has financial need can qualify. The applicant must meet the following qualifications:
- The student applicant must be enrolled in an eligible school
- The student must at least have half time status. This means he or she has 6 to 8 units or hours per semester.
- The student must have met the selective status requirements
- The student must be a citizen of the United States or an eligible non citizen (i.e. alien with student visa)
- The student must not be in default on other scholarship loans.
- Must meet the minimum academic performance set by the institution.
- Must Fill Out a FAFSA form
- Must submit a promissory note upon approval.
FAQ: Repayment Scheme
The maximum payment period for a Perkins loan is 10 years. The repayment starts several months after graduation to allow the student enough time to find gainful employment and the interest rate is 5% fixed. All these translate to the best loanable terms for a student. Please note that the 10 year limit also minimizes interest payment and allows the scholarship fund to circulate for the use of other grantees.