Another Perkins Loan question

<p>My daughter was offered both a Perkins loan and a subsidized loan. As I understand it, interest is not charged to her while she is a student. Does that benefit continue to apply to graduate school? If she graduates and starts repayment and then returns to grad school at a later date does the interest stop while she is in grad school?</p>

<p>If she does not accept these loans, will these funds become available for other students? Would turning them down mean she would not be offered these in the future (assuming nothing else changes)?</p>

<p>The subsidized stafford loans are available to everyone who is eligible, and are not limited to a certain number of students per college </p>

<p>The Perkins loans are different - there is only a limited alottment per college, and if a student turns them down, another student can receive them. Also, if a student doesn’t pay back the Perkins loan on time, it means less money is available for other students from that college. It would be up to that individual college whether they offer you Perkins loans next year, if you turn them down this year. </p>

<p>The Perkins program is expiring in a year or two, and Congress may not replace it. The President wants an expanded Perkins program that would direct more loan funds to colleges that meet certain affordability and performance goals, but the House may refuse to approve any spending on the program. </p>

<p>The subsidized Stafford loans are scheduled to increase to 6.8% for new loans starting July of this year. Therefore, it may make sense to take out as much 5% Perkins loans now as you can, and use any savings to minimize the amount of 6.8% loans you need in future years. </p>

<p>Yes, my understanding is that the loan payments are deferred for both while you are still a full-time undergrad, grad or professional student. </p>

<p>Federally subsidized loans are no longer available for graduate or professional school, but you can still take out 6.8% loans for those purposes. The interest for those grad/prof school loans start to accrue soon after you sign for them, while you are still in school.</p>

<p>So if she returns to grad school after working a few years, the loan balance is effectively frozen and interest does not to restart accruing until she is no longer a full time student.</p>

<p>So turning down the subsidize loan does not help another student. I realize it would help the taxpayer. Turning down the Perkins might make those funds available to another student.</p>

<p>So what will happen to a student’s financial aid package if Perkins loans go away after next year? For a kid with $5500 Stafford’s and $3000 Perkins (this is in one of the FA packages my son was offered), how will the school make up the difference? They cannot make it up with Stafford’s second year as this would exceed the limit of $6500. Sorry to noname if this is off topic. I think we will have to question the school about this.</p>

<p>The school won’t make up the difference, most likely. The student should advance a year & be eligible for $6500 in Stafford loans. The balance would be “offered” as a Parent PLUS, would be my guess.</p>

<p>You may find that some colleges already offer most Perkins loans to freshmen and sophomores, because those students can take out less subsidized stafford loans per year than juniors and seniors. </p>

<p>Most colleges “gap” students and don’t promise to meet all of their financial needs, through grants, loans, work study or other sources combined.</p>

<p>We already have FA packages back from four schools, my concern is that “gap” growing faster than expected. I know my son will be need to take on more in loans each year and that as the cost of attendance goes up we will need to help pick up that increase. For us it would not be a deal breaker if his student loan eligibility went down by $2000 after one year, but I’d imagine for some students that might cause a real problem. I’m just hoping it’s not too much to ask for consistency in our aid package if our income remains relatively stable.</p>

<p>My former employer was a large public school. The Director of Financial Aid was very good at convincing the powers-that-be to fund need-based aid. Of course, it wasn’t viewed as ideal by everyone, but I think we did a pretty good job of assisting the neediest students. As state funding is cut, it gets more and more difficult for schools to have stable funding - and the student population varies, as well. I know that the majority of schools work toward stabilizing funding, but it doesn’t always work out due to economic constraints. It makes it hard on all concerned.</p>