The Federal Perkins Loan Program provides long-term, low interest (five percent) loans to undergraduate and graduate students demonstrate financial need and enroll in participating schools.
You begin repaying the loan nine months after you graduate or leave school. If you return to school, you have six months before you start repaying on previous loans. You may be allowed up to 10 years to repay your loan.
The amount of the monthly payment depends on the size of the debt and the length of the repayment period.
You must seek approval for these provisions from your school.
There are three different programs available in this family of loans:
- Federal Subsidized Stafford Loan
- Federal Unsubsidized Stafford Loan
- Federal Parent Loan for Students (PLUS)
The main difference between subsidized and unsubsidized Stafford Loans is that the subsidized is available only to those who can demonstrate financial need, and the interest is paid to the lender by the government while the student attends school at least half time. With the unsubsidized Stafford, the student pays the interest while enrolled.
What Are Your Repayment Options? Subsidized Loan
The amount of your payment depends on the size of your debt. However, you will pay at least $50 per month in principal and interest. Under certain conditions you may defer (postpone) payments for up to three years. Ask your financial aid administrator, your lender or read your promissory note to obtain information about deferring payment.
Some borrowers can repay their loans based on a "graduated" or "income sensitive" repayment. This option considers your financial situation when determining the monthly payment. For more information, ask your lender or servicer.
What Are Your Repayment Options? Unsubsidized Loan
Borrowers of the Unsubsidized Stafford Loan are required to pay interest on the loan while in school. You may be charged a one percent guarantee fee and a three percent origination fee that will be subtracted from each disbursement of your loan.
You may make monthly or quarterly interest payments to your lender -- or you may choose to have your interest added to the principal of the loan. This is called "capitalization." This can occur during:
- The grace period -- the time before beginning repayment.
- Periods of authorized deferment -- postponement.
- Periods of forbearance -- authorized delay in loan principal payment.
Federal Parent Loans For Undergraduate Students
The Federal Parent Loans for Undergraduate Students (PLUS) program provides loans to parents of dependent undergraduate students (and now to students in graduate or professional programs) through private lenders and directly through schools participating in the Direct Loan Program.
What Are Your Repayment Options?
Repayment of both principal and interest begins within 60 days of receiving the loan and extends from five to 10 years. The amount borrowed determines the minimum monthly payment, but no payment will be less than $50 a month.
Borrowers can choose a standard, extended or graduated repayment plan.
Alternative Loans
Alternative loans are available from private lenders, such as banks, savings and loan associations or credit unions. Typically, these loans cost the student and family more in the long run, but they may have fewer eligibility restrictions.
For more information, contact commercial financial institutions or the financial aid administrator at the school you are attending or are planning to attend.
