Federal Perkins Loan: What to Watch Out For

A college education can be very expensive, but if you meet certain income criteria, you could be eligible for a low interest rate Perkins Loan. A Perkins loan is a loan that is only available to students meeting certain income criteria. They are loans with extremely low interest rates, often as low as 5%. No payments are required while you are attending an approved school at least half time.

It is critically important to understand, however, that whether or not you graduate, if you drop below half-time status, your loans will become due and payable within nine months. Perkins loans can also be cancelled if you enter a qualifying career, such as:

  • nursing (must work full-time to qualify)
  • teaching (certain restrictions apply; you must teach a high-need subject or work in a high-need school)
  • police (must work full-time to qualify)
  • Peace Corp volunteers

There are two things you must keep in mind when considering a Perkins Loan to help meet your education cost burden:

Maximum Loan Amount. The maximum loan amount available for a Perkins Loan is $4,000. This is rarely sufficient to meet your needs by itself. The loan amount you take and the amount you receive will differ by the amount taken for processing fees before the loan is disbursed.

Repayment Term. The repayment term on your Perkins Loan is typically ten years. For each $5,000 you borrow, that equals about $50 a month in repayment.

 


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