Recently, there has been an upward trend in the number of students who are going to school. While it is a good thing more and more people are given the opportunity to go to college, financial aid such as scholarships and grants are becoming harder to obtain, even though the Department of Education spends billions of dollars every year on financial aid. Federal loans are a good way to finance your education with low interest rates.
What are Perkins loans?
Perkins loans come from public funding(interesting article on how funding is declining – here) and are awarded at the the discretion of the school. This is what is called an institutional loan. These loans have a fixed interest rate of 5% and students do not have to pass a credit check in order to qualify for these loans. This eliminates the need for a cosigner.
Who can qualify for a Perkins loan?
It is the school’s discretion that determines which students will get the perkins loan, and how much money will be awarded to them through this. These decisions are made based on the information they received from FAFSA.
What are the benefits of a Perkins loan compared to other types of loans?
- Subsidized- This means that the loan will not start collecting interest until the repayment period has begun, which is usually around nine months after graduation.
- No need for a cosigner or good credit history- It would be very difficult to get a low interest rate (5%) from a private lender, especially without a cosigner.
- Forgiveness programs– Federal student loans come with forgiveness and payment programs that can drastically cut down on the amount of debt you have. This only applies for federal loans, not private student loans.
- Safer and will probably save you money in the long run rather than using private lender. Since you have a lower interest rate than you would find with a private student loan, you would save money in the long run if everything else was the same. Federal loans are also eligible for forgiveness and payment programs that can drastically cut down on the amount a borrower owes.