The Perkins loan program was created in 1958 when Congress saw a strong need for a more educated workforce during the Cold War. The Perkins loan program ended in September 2017, but many borrowers still have outstanding loans. The interest rate on a Perkins loan is fixed at 5%, and there is a nine-month grace period after you graduate or leave school before repayment begins. You have up to 10 years to repay the loan in full.
Example of a Perkins Loan
Let’s say Perkins loans were still around today and you attended a school that had a Perkins loan program. If you met the financial need requirements, you could have received per year up to $5,500 as an undergraduate or up to $8,000 as a graduate student. The exact amount would have depended on your level of need, the other types of aid you were receiving, and how much money your school had to give out.
How To Get a Perkins Loan
While you can no longer get new Perkins loans, borrowers seeking them in the past needed to demonstrate financial need and had to be enrolled in an undergraduate or graduate degree program at an eligible school. Eligible schools included public and private colleges and universities that participated in the Perkins loan program. Eligible borrowers needed to be enrolled in at least half-time status to receive a Perkins loan. The maximum loan amount was $5,500 a year for undergraduate students and $8,000 a year for graduate students. Your school’s financial aid office would determine your eligibility for a Perkins Loan and how much you could borrow. It would ultimately depend on your financial need and how much award money the school had available to give out.
Perkins Loan vs. Pell Grant
Both Perkins loans and Pell grants are decided based on your Expected Family Contribution (EFC), which is determined by the FAFSA form you fill out when applying for financial aid each year. Your EFC is the amount your family can reasonably be expected to contribute toward your education costs based on their income and assets. Students with higher EFCs will generally not be eligible for either form of aid, while those with lower EFCs may qualify for both forms of aid depending on the cost of attendance at their chosen school. Lastly, federal Pell grants are only available to undergraduate students, while Perkins loans were available to both undergraduate and graduate students as long as they met other eligibility requirements, such as being enrolled at least half-time each semester.
Stafford Loans
One option is to take out a federal Stafford loan. Stafford loans have fixed interest rates, come in subsidized and unsubsidized options, and offer a number of repayment options, making them ideal choices for many students.
Direct PLUS Loans
If you need financial help for graduate school or a professional program, a Direct PLUS loan could be worth looking into. It’s a type of direct loan, meaning it’s offered by the federal government.
Grants and Scholarships
Another option is to apply for a grant or scholarship. There are a number of organizations that offer grants and scholarships specifically for students who are struggling to pay for college.
