How to Apply for a Perkins Loan
For many students, going to college seems to be synonymous with taking out student loans. Although loans must be paid back, it is good to know that they’re available to make going to college an option when it might not otherwise be possible. The federal government sponsors aid programs that include loan programs; these programs generally have more favorable terms than private student loans.
The Direct Loan program is the major source of student loan aid and includes subsidized and unsubsidized loans as well as Direct PLUS loans (for parents of dependent undergraduates or for graduate students). The Federal Perkins Loan is a separate loan program and only certain students who demonstrate low-income levels on the Free Application for Federal Student Aid (FAFSA) qualify.
Based on information provided in the FAFSA, an admitting college will calculate a financial aid package, which may include:
- Federal student loans
- Federal grants
- State grants
- School scholarships
- Private loans
As Federal Student Aid explains, in the case of exceptional financial need, the college may provide a student with a Federal Perkins Loan. Here are some important features of this loan:
- A 5 percent interest rate
- Only available at participating schools
- The school is the lender
- Availability depends on funding at the school
- The loan amount depends on the level of need
The cap on undergraduate Federal Perkins Loan borrowing is $5,500 per year. The total amount that can be borrowed over the course of undergraduate study is $27,500. For students who believe they will qualify for a Federal Perkins Loan, it is best to submit the FAFSA as early as possible to be considered for this loan while funds are available.
Another benefit of the Perkins Loan is that there are no additional costs (other than interest). However, borrowers must be advised that during the repayment period, if a payment is missed (or if the account continues to fall delinquent), late payments will be assessed as well as possibly collection costs. When in repayment, borrowers will work directly with the school (as the lender) or a third party the school designates as the loan service provider.
Applying for the Perkins Loan
In order for a student to complete the Perkins Loan, she will need to complete a Federal Perkins Loan Master Promissory Note. After accepting an offer for a Perkins Loan, students can complete the Master Promissory Note online. The school will provide guidance on how to complete the process, and they may provide its own online portal. In general, the process of signing the Master Promissory Note will require:
- At least 30 minutes to complete (the note must be finished within one session)
- The student’s FSA ID
- School name
- Personal information
- Employer information (if applicable)
- Two personal references
Students who have already completed a Direct Loan MPN may find that certain information is already populated. It is best to check any prepopulated information for accuracy to avoid loan processing delays. At the time the student completes the first Federal Perkins Loan MPN, he should inquire with his school about whether or not he will have to complete one each year (in some cases, students will only need to sign one initial MPN and it will be valid for Federal Perkins Loans in subsequent years).