Perkins Loans Are Better than Stafford's | 03.13.09
It’s true; if you can secure a Federal Perkins loan through your school it is a better option than a Stafford loan. The Perkins Loan Program provides low-interest loans to help needy students finance the costs of postsecondary education. Perkins loans hold a fixed interest rate of 5%, while subsidized Stafford loan are at 5.6% for the 2009-2010 academic year and 6.8% for the unsubsidized.
The problem with the Federal Perkins loan, however, is that there are more eligible students than there are loans to give. Perkins loans are awarded through the school, and are part of a revolving loan fund. A revolving loan fund just means the available funds in the pool are dependent on former students who are paying back money from their Perkins loans from previous years. As a result the number of students who receive a Perkins loan from a school can change from year to year. Additionally, the Perkins loans are awarded on a first come first serve basis, which is why completing your fafsa early is pivotal.
Students can receive Perkins loans at any one of approximately 1,800 participating postsecondary institutions. Institutional financial aid administrators at participating institutions have substantial flexibility in determining the amount of Perkins loans to award to students who are enrolled or accepted for enrollment.
Borrowers who undertake certain public, military, or teaching service employment are eligible to have all or part of their loans canceled. Below is a list of loan discharge conditions for the Perkins loan.
|Cancellation Conditions||Amount Forgiven|
|Bankruptcy (in rare cases – cancellation is possible only if the bankruptcy court rules that repayment would case an undue hardship||100 percent|
|Closed school (before student could complete program of study) – applies to loans received on or after Jan.1, 1986||100 percent|
|Borrower’s total and permanent disability or death||100 percent|
|Full-time teacher in a designated elementary or secondary school serving students from low income families||Up to 100 percent|
|Full-time special education teacher (includes teaching children with disabilities||Up to 100 percent|
|Full-time qualified professional provider of early intervention services for the disabled||Up to 100 percent|
|Full-time teacher math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas||Up to 100 percent|
|Full-time employee of a public or nonprofit child or family services agency providing services to high-risk children and their families from low-income communities.||Up to 100 percent|
|Full-time nurse or medical technician||Up to 100 percent|
|Full-time law enforcement or corrections officer||Up to 100 percent|
|Full-time staff member in the education compnent of a Head Start Program||Up to 100 percent|
|VISTA or Peace Corps volunteer||Up to 70 percent|
|Service in the U.S. Armed Forces||Up to 50 percent|
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