Federal Perkins Loan
Perkins Loans are available to students who demonstrate a need for financial assistance. Students may borrow up to $4,000 a year, not to exceed a total of $20,000. Repayment begins and interest begins to accrue nine months after the student ceases to be enrolled at least half-time. The loans carry a fixed interest rate of 5.0% per year. Minimum repayment is $40 per month. This loan is awarded and administered by the college but funds are provided by the federal government.
Federal Stafford Loan
The Federal Stafford Loan is a long-term, low interest student loan available from commercial lenders to help with educational costs.
Eligibility for the Subsidized Stafford Loan is based on a student’s financial need as determined by the FAFSA, and interest is paid (subsidized) by the federal government while the student is enrolled at least half-time, and for six months thereafter. At the end of the six month grace period, repayment begins and interest becomes the responsibility of the student borrower.
Eligibility for the Unsubsidized Stafford Loan is not based on financial need, and there is no government interest subsidy. Interest accrues while the student is in school. Interest payments may be made during enrollment, or the interest may be capitalized by the lender and added to the principal.
The annual loan limits are as follows:
First year students $3,500
Second year students $4,500
Third year and beyond $5,500
The total loan limit for dependent undergraduates is $23,000. Independent students are eligible for up to $46,000. The interest rate on this loan is fixed at 6.8% for students who borrow their first loan on or after July 1, 2006. Lenders may deduct up to 3% for an origination fee and up to 1% for a default fee.
Parent Loan for Undergraduate Students (PLUS)
This loan allows credit worthy parents an opportunity to borrow additional funds to help pay for college. This loan is available through various commercial lenders. Parents do not have to show a financial need to be eligible for this program. This loan carries a fixed interest rate of 8.5% for loans disbursed on or after July 1, 2006. Insurance and origination fees of 3 percent will be deducted from the gross amount borrowed.
The annual loan limit is the difference between the cost of education minus all other financial aid. Repayment begins 60 days after the loan is disbursed.