Perkins loans were one of the cheapest options for funding education. The program targeted low-income students and required only a 5% interest rate. With its low-cost terms and nine-month grace period, Perkins loans aided thousands of students in need of financial support. Besides those benefits, this loan provides other advantages such as Perkins loan forgiveness opportunities. Borrowers working in public service or dealing with exceptional cases, such as bankruptcy, can partially or eliminate their debt. This guide will discuss all tiny details of the Perkins loan forgiveness programs, including cancellation and discharge.
Due to budgetary issues and the decentralized nature of federal loans, the Perkins loans stopped applications in 2017. Unfortunately, there emerged no perfect substitute for the Perkins loans with the same favorable conditions. However, we will also discuss the best alternatives, which can be considered if a student deals with financial limitations.
People who rely on tight budgets to live usually lack the additional funds for a decent education. When it comes to paying the education costs, they mostly look for a loan. The Federal Perkins loans were one of those loan programs that aided people in accessing higher education Kansas payday loans near me. This student loan offered a 5% fixed interest rate. Hence, it was one of the cheapest sources of funds for needy students. Besides, there was a nine-month grace period. The grace period allows debtors to have some time before starting making payments after leaving school. Whether students graduated, left the school willingly, or dropped below the half-time status, they were required to make payments nine months later. However, this period was still useful because people might find a job without worrying about their loans’ monthly payments.
What made Perkins loans unique was that its grace period was longer than other available loans. Another distinctive characteristic of this loan was its funding scheme. While the government provided the loan, the schools could also contribute to the amount. Around 1700 schools made loans to their students and credited payments twice a year during the academic year. Plus, making payments was easier because borrowers could directly make the payment to the school or the institution’s servicer. In other cases, they deal with numerous federal loan servicers that act as an intermediary between the debtor and the U.S Department of Education.
Eligibility for Perkins Loans
Perkins loans program was need-based. Both undergraduate and graduate students could be eligible if they could prove an extreme financial difficulty. Undergraduate students received $5500 per year, but there was a limit of $27500. Meanwhile, graduate borrowers got $8000 yearly, and they had a $60000 limit.
What Happened to Perkins Loans?
One can wonder that if this student aid was that fantastic why it ended. Congress . Therefore, the program officially ended at the end of . Yet, the disbursement of the loans continued till .
Previously, there were attempts to end the program. In 2015, the government started the process of closing this student aid. One of the main reasons for the program closure was budget limitations. Some congressmen still tried to find a better solution to help the students who need the aid the most. They thought that this low-cost funding option was an excellent opportunity for poor students. Others, who opposed the continuation of the program, justified their ideas by claiming that the closure will facilitate the simplification and centralization of federal loans. As mentioned before, Perkins loans allowed schools to lend funds directly and contribute to the program’s funding together with the government. The Senate blocked the attempts of people who opposed the closure, and though the program was extended, it ended in 2017.