Today education has become one very important and inseparable aspect of life.
With the value of education and educated people getting higher and higher both in the social and financial arena, more and more people have taken up this aspect in a very devoted way.
Mere interest to pursue higher studies is not adequate to emerge as a successful graduate or postgraduate.
Money plays a very important role in realizing this dream. Many people find it hard to accommodate their desires with the available economy of theirs, leading to dropouts at various levels of education.
It is to bridge this financial gap that the government has come up with various scholarships, grants and federal loans to support the education of the youth.
It is the students or their parents who are in the position to choose the best-suited education assistance program that would support them through out their education. It is also up to the student to choose the best-suited repayment plan to pay off their education debts.
According to the expert’s point of view, the normal procedure and the resources to be used, when it comes to college payments are:
Federal loans are those, which are disbursed by the government as financial aid and education assistance programs for students in the U.S. They often come with a reduced rate of interest and a whole lot of add-on features beneficial to students.
There are two federal student loan programs: The Perkins Loan Program and the Direct Loan Program. For availing these federal student loans, an individual has to file an application named Free Application for Federal Student Aid (FAFSA). The Perkins Loan is the most sought after loan by most of the students for the various benefits it offers to the borrower.
A federal Perkins Loan remains to be the most wanted loan in the federal loan category, subject to your eligibility for availing the loan.
In this case the lender will be the school that you attend. This financial aid by the government is provided to students who are really in need of financial support for pursuing their education.
The affordability factor by the student plays a major role in being eligible for the loan. The poorer the affordability ratio, the better are the chances of the student becoming eligible for Perkin’s loan.
A Federal Perkins Loan is offered as a 5% fixed interest rate loan for undergraduate and graduate students with exceptional financial need. Due to its long list of benefits such as low interest rate, selection process and liberal cancellation plans, it remains to be the most favorite and reasonable financial aid program for students in the graduate sector.
A student should satisfy the following conditions to be eligible for the Federal Perkins Loans:
If an applicant successfully meets all the eligibility criteria, his financial need is then analyzes by the Department of Education – U.S, with the various details provided in the FAFSA.
The Department of Education decidesthe applicant’sEFC (expected family contribution), which is the amount that the applicant is expected to contribute towards the education.
The EFC is calculated as follows:
EFC = A portion of net income (income after deducting basic living expenses) + A portion of net assets (assets after deducting asset protection allowance)
The maximum amount that is offered based on the EFC formula:
Benefit per Year
(For Entire Term)
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Like all other federal loans, to apply for federal Perkins Loan, one has to simply filling and submitting the FAFSA. However, along with your FAFSA, the applicant is required to submit a promissory note.
The Master Promissory Note (MPN) is a legal binding document that makes sure that the borrower repays the loan(s) along with accrued interest if any to the U.S. Department of Education. It also illustrates the basic terms and conditions of the loan(s).
A Single MPN can be used to borrow additional Direct Loans for up to 10 years. Subject to your school’s approval.
Once started, the entire MPN procedure should be completed in a single session, which usually takes around half-an-hour.
The applicant is to sign the Perkins MPN electronically through a third-party vendor called ECSI.
As far as Federal Perkin’s Loan is considered, the school that the applicant attends is the lender and pays the loan either to the applicant or uses the loan to the applicant’s school expenses.
In this loan type, the interest does not get accrued while the applicant is in school, so there is nothing much that the applicant has to worry about.
The governing bodies necessitate that the borrowers complete the exit counseling for loans received through the Federal Perkins Loan Program. During the exit interview, the borrowers will be given a brief about the following information:
If you are a half-time student then you have a grace period of 9 months before you start repaying your Perkins Loans, which means you start your repayment in the tenth month from graduation or if you happen to withdraw from college. However you may be entitled to an extended grace period if you are on active service with the military or if you re-join in school to pursue your education.
If you cannot pay back for any reason, consider asking for cancellation, deferment or forbearance.
For becoming eligible for various options, the borrower has to fulfill certain conditions as laid down by the governing bodies:
The loan that you have availed of gets canceled on the event of any of the following occurrences:
A deferment is referred to as a period during which the repayment of the principal and interest of your loan is provisionally postponed.
During this deferment period, the borrower is not required to make the payments and in case of Federal Perkin’s loan, the government pays the interest during the deferment period.
When can a student apply for deferment?
If a student doesn’t get eligible for deferment, then he can go in for the option of forbearance. Here the loan servicer might grant the student forbearance. As per the option of forbearance, the student may stop making payments up to 12 months.
There are two types of forbearances:
Under the discretionary forbearances, the lender, who happens to be the school in case of a Perkin’s Loan, has the choice of granting forbearance or not.
A discretionary forbearance may be requested for the following reasons:
A mandatory forbearance might be requested for the following reasons:
The Federal Perkin’s Loan is a loan, which comes with strict selection procedures and this is due to the fact the loan is hoarded with multiple benefits. Some of the matchless benefits offered exclusively under Federal Perkin’s Loan are:
The Perkin’s loan follows various measures to determine the eligible applicants; however there are a lot of students applying for this loan and the loans are disbursed by their schools according to the funds allocated to them.
The early submission of FAFSA will make sure that you can be considered for loans first, and therefore get the maximum amount you are eligible for. Basically the Perkin’s Loan follows the First Come First Serve model.
What more do you want? Financial hardship is no more a barrier to education. Apply for Federal Perkin’s Loan by filling a FAFSA and enjoy the unmatched benefits under this wonderful financial aid programs.