Father0611

I just read the assertion "The Perkins Loan is the best student loan available." Really? Even better than subsidized Stafford loans? Perkins loans are at a 5% interest rate. Subsidized Stafford loans, at least for now, are at 3.4%. Interest does not accrue on either until after graduation. Am I missing something?

Thank you.

annasdad

IF Staffords stay at 3.4, then yes, they're better. Otherwise, Perkins are better. There's also no origination fee for Perkins and you get 9 months grace to begin repayment.

swimcatsmom

The last 2 years, subsidized direct (or Stafford) loans had a lower interest rate than Perkins loans - 4.5% the year before last and 3.4% last year. Before that they always had a higher rate than the Perkins. The subsidized direct (or Stafford) rate is scheduled to jump back to the old rate of 6.8% for loans disbursed after July 1st. This may or may not change, depending on the politicians.

Father0611

Thanks a lot!

Father0611

Are Perkins and subsidized Stafford the same in that neither accrues interest while the child is enrolled in school or in deferment?

swimcatsmom

Interest does not accrue on either while the student is in school at least half time. The Perkins additionally has a 9 month grace period after the student graduates or drops below half time. The subsidized direct loan used to also not accumulate interest during the grace period, but new sub direct loans disbursed after July 1 2012 do accumulate interest during the grace period.

ohiobassmom

S' new Staffords (sub) will have a 1% fee, if I read the paperwork correctly. So though interest free until after grad/grace period, we'll still have to pay that extra 1%.

Not so the Perkins.

sleepyrain

The sub stafford loans are staying at 3.4%... so the stafford loans are better for this year?

nuhjeea

No, please check out this article. It will answer all your questions.

Subsidized Student Loans: Stafford vs. Perkins

romanigypsyeyes

That article is incorrect. The rate will indeed be staying at 3.4% this year.

Actually, many things in that article are incorrect. And it's terribly written... I don't think the author's first language is English... Please ignore it.

kelsmom

◦Elimination of origination fee rebate on Stafford Loans and Parent & Grad PLUS loans beginning with the 2012-13 academic year.
This change will result in a 1% origination fee for all for Direct Stafford Loan (subsidized & unsubsidized) borrowers. A 4% origination fee will be assessed for all Parent PLUS and Graduate PLUS Loan borrowers.


It used to be that there was a 0.5% origination fee rebate for DIrect Loans, but that has been eliminated for the coming year. Now $1000 of Direct Loan will yield $990 (instead of $995) to the student's account. To determine how much you need to borrow to pay off a particular amount of money, divide the amount due by 0.9:

$3500 due
$3500/0.9 = 3889 must be borrowed in order to have $3500 pay to the student's account

romanigypsyeyes

^ I think you mean .99 rather than .9