The vast majority of students will have some type of federal student loan included in their financial aid award package. Over the next few weeks, these emails will give you all the details you need to make informed decisions about borrowing student loans. Today, we're starting with the Federal Perkins Loan.
What is a Perkins Loan?
Loans borrowed through the Federal Perkins Loan Program are fixed-interest federal student loans available to undergraduate students with high financial need (which is determined by the FAFSA).
Who is eligible for a Perkins Loan?
Students who submitted the FAFSA by the February 15th priority deadline and demonstrate financial need may be offered a Perkins loan. However, the amount of funding we have available for this loan is extremely limited. Therefore, many students who would otherwise be eligible won't have it offered as a part of their financial aid award. If you don't see a Perkins loan on your award letter—and you submitted the FAFSA by the priority deadline—chances are that funding was depleted.
What are the terms of the Perkins loan at DU?
Here's a quick rundown:
|Federal Perkins Loan Terms:
||University of Denver
|Maximum Loan Amount:
||$4,000 per year
||5% fixed. Interest does not accrue while you are enrolled at least half time (6 credits) or during the grace period.
|Requirements to Receive Funds:
||You must submit a Master Promissory Note to the DU Bursar, complete Entrance Counseling through MappingYourFuture.org, and be enrolled at least half time (6 credits or more).
||Up to 10 years
|Payment Due Dates:
||Quarterly on 3/1, 6/1, 9/1 and 12/1
||Depends on total amount borrowed, but it won't be less than $120.00
Let's review these terms in more detail:
- Lender: If you borrow a Perkins loan while at DU, you will be borrowing it from—and repaying it to—the University of Denver.
- Maximum Loan Amount: Although federal regulations allow undergraduate students to borrow up to $5,500 per year, DU is only able to offer students $4,000 per year because of our limited funding.
- Interest Rate: The interest rate is fixed at 5% for the Perkins loan, so it will never change! And since this loan is subsidized by the U.S. Department of Education—which means they pay the interest on it while you're in school and during the grace period—interest won't start accruing until you begin repaying it.
- Origination Fee: Some loans have origination fees that are taken out of the loan before funds are sent to DU. The Perkins loan is the only federal loan with no fees!
- Requirements to Receive Funds: If you accept the Perkins loan, you must complete a Master Promissory Note (which is your agreement with DU that you will repay the loan) and Entrance Counseling (which will help you understand the terms of the loan) before any funds can be sent to DU.
- Grace Period: This is the period of time after you graduate (or drop below half-time enrollment) during which you do not have to make loan payments. So, you won't have to start paying back your Perkins loan until 9 months after you graduate.
- Repayment Length: You will have 10 years to pay back your loan in full; however, most students pay it off faster than that because their total loan debt isn't high enough to need that amount of time. There is no penalty for paying your Perkins loan off early.
- Payment Due Dates: Unlike other federal loans, your payment for a Perkins loan will be due every quarter (instead of every month). These due dates will be the same every year: March 1st, June 1st, September 1st and December 1st.
- Payment Amount: Your loan payment will be at least $120 every quarter; however, depending on the total amount you borrowed during your time at DU, your payments may be higher. The Bursar's Office will set up your repayment plan once you graduate.
How will I receive my loan money?
As with all other types of financial aid, Perkins loan funds will first be sent to the Bursar's Office at DU (who is responsible for the collection and billing of tuition-related charges) and then be applied directly to your University bill. The total amount of your loan will be disbursed evenly over three separate installments: one each for fall, winter and spring quarters.
What if I am unable to make my loan payments?
Under some circumstances, you may be able to request a deferment or forbearance on your loan, which means you can postpone payments for a period of time. Circumstances that may warrant a deferment include enrolling in graduate school, inability to find employment, and economic hardship. Since the lender for your Perkins loan is the University of Denver, you would request a deferment or forbearance directly with the DU Bursar.
Can my loan ever be cancelled or forgiven?
Yes! You can have all or part of your loan cancelled if you engage in certain types of public service, such as the Head Start program, the Peace Corps, or the military, or by teaching in low-income schools.
Find additional information about the Perkins loan on the Bursar's website, or contact them directly at 303-871-4944 or email@example.com.
Up next week: Federal Direct Loans
Want to review past Financial Aid 101 emails? Check out the archives!