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Funding your Education with Federal Financial Aid: Perkins Loans
by Brooke Heath

Perkins loans are federal student loans that are unique in that they are campus-based aid given through a student's school. The funds are contributed from both the federal government as well as the school, so they are still considered federal loans. Because the school acts as the lender, the borrower will repay the school, once he or she enters their repayment period.

These loans are given to students who demonstrate financial need, based on their expected family contribution ("EFC"). The EFC is the amount of money that a student or their family can contribute to their college education.

The loans are disbursed directly from the school to the student, usually in the form of two separate payments during the academic year.

Not Just Your Average Federal Loan…

Perkins loans are unlike any other federal loans. For starters, with an interest rate of 5%, Perkins loans have the lowest interest rate of any federal loans available. Also, the grace period for Perkins loans is nine months instead of the normal six months on other federal loans. This gives students time to establish their financial situations prior to beginning their repayment period.

Another huge benefit of taking out Perkins loans is that they are subsidized. With subsidized loans, the government will pay off all of the interest that accumulates on the loan while the student is in school, in their grace period, or in deferment. After this time, the interest is the borrower's responsibility.

Also, depending on the student's career choice, Perkins loans can often be forgiven.

As with all federal student loans, Perkins loans offer benefits like deferment and forbearance options. These two options allow borrowers to temporarily suspend their monthly payments due to financial hardship or other hardships.

Also, like other federal loans, Perkins loans are not based on credit, so borrowers who do not have a credit history, or have a poor credit history, will not be discounted for these loans. Because Perkins loans are not credit-based, there is no need for a cosigner, either.

Finally, there are no prepayment penalties on Perkins loans or any other federal loan. This allows borrowers to repay their loans as early as they choose to.

Loan Limits

The loan amount that a student can receive with a Perkins loan is determined by the school's financial aid office. The school's financial aid office usually takes into consideration the amount of funds that are available to provide for other students to receive aid. The program limits are $4,000 per year for undergraduate students and $6,000 per year for graduate students, with cumulative limits of $20,000 for undergraduate loans and $40,000 for undergraduate and graduate loans combined.

It is a good idea to visit your school's financial aid office and meet with an advisor to learn about the amount that your school will issue in Perkins loans.

How to Apply

To apply for a Perkins loan, students must complete the Free Application for Federal Student Aid (FAFSA) form. This form provides the government and the student's school with information that will determine the student's eligibility for the loan, such as the EFC. This form can be completed online at

Consolidate Your Federal Loans

Another great benefit in borrowing Perkins loans is that they can be consolidated with other federal student loans. Consolidation bundles all of your federal student loans into one easy-to-manage loan. With this new loan, borrowers receive just one monthly statement, and make only one low, monthly payment to only one lender. This saves them the hassle of making multiple payments to multiple lenders every month.

Also, when borrowers consolidate with a true lending company like EdFed, they can save thousands of dollars over the life of their loan, and even lower their monthly payment by almost 50 percent!

EdFed Helps Students Achieve their Goals

EdFed is an industry leader, who is dedicated to helping students achieve their educational goals, as well as manage their student loan debt. EdFed offers incredible borrower benefits, as well as competitively, low interest rates and flexible repayment options.

Read More!

For more information on Perkins loans or other federal student loans, read more of EdFed's informative articles or visit these websites:

Department of Education

Student Loan Comparison Chart from the Department of Education


Article Title : Funding your Education with Federal Financial Aid: Perkins Loans
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.

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Schools Will No Longer Receive Paper FAFSA Forms
(September 20, 2007)

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