Federal Perkins Loans

Written by Nicole Madison
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Wondering if you should consolidate your Federal Perkins Loan? While Federal Perkins Loans can be consolidated, there are factors particular to Perkins Loans that can make it less than advantageous to include them when consolidating. Be sure to carefully consider the risks as well as the benefits of consolidating your Perkins Loans.

Should You Consolidate Federal Perkins Loans?

Federal Perkins Loans are low interest loans funded by the federal government but awarded by colleges to both undergraduate and graduate students. Perkins Loans are awarded to students who can demonstrate high financial need. The interest rate on a Perkins Loan is 5 percent and there is a nine month grace period after which the borrower must begin loan repayment. This interest rate can impact negatively on the calculated interest rate average used to determine the rate for the consolidation loan. In addition, in a FFEL consolidation you will lose the interest subsidy on future deferment periods. However, you can retain the interest subsidy in Direct Loan consolidations.

Perkins loans offer special borrower benefits, such as loan cancellation for employment in certain fields. These employment fields include, but are not limited to, teaching, nursing, and law enforcement. Service in the Armed Forces and Peace Corps qualifies you for loan cancellation as well. If you choose to include your Federal Perkins Loan your consolidation loan you will forfeit your right to this special benefit.


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