Consolidating Perkins Loans – Carefully Review your Options

Most Federal Loans can be Consolidated

Most federal student loans can be consolidated. So, if making the monthly payments becomes a chore on your student loans, then you have a way to alleviate the burden. If you are thinking of obtaining a student loan consolidation then, it is important to review the interest rates and benefits of the individual loans that you want to combine into one loan amount. As a consolidation can cause you to lose certain amenities you now enjoy, such as discounted interest or cancellation privileges, make sure the move will benefit you financially.

Features of the Perkins Loan

For instance, Federal Perkins loans are government-backed loans that offer low interest rates and are available for indigent students. Loans do not accrue interest as long as the borrower is taking classes or is enrolled, at the minimum, part-time. Repayment of the loan begins nine months after graduation or when the student is enrolled less than part-time. The repayment period is for ten years.

Perkins Loans: Requirements for Consolidation

Perkins loans can be consolidated into a Federal Direct Loan consolidation if they include an FFEL (Federal Family Education Loan) or Direct Loan in the financing. Therefore, Perkins loans cannot be consolidated individually. In addition, if they are consolidated into a Direct Loan, they are non-subsidized. That means interest will accrue on the loan amount even if the loan is deferred due to re-enrollment, economic hardship, or unemployment.

Consolidating Federal Student Loan Debt

The HEA (higher education act) encourages student loan consolidation via the Federal Direct Student Loan Program (FFDLP) program and FFEL (Federal Family Education Loan) financing. Both these consolidation programs make it possible for borrowers to combine varying kinds of student loans into one easy-to-pay consolidated loan amount. Interest is typically less than most of the eligible loans that can be included in the consolidation and payments lowered because the payment period is lengthened.

Benefits of Perkins Loans

However, Perkins loans do provide cancellation benefits that are forfeited if you choose to consolidate the loan. The grace period of nine months is also sacrificed if you elect to consolidate. In addition, if a Perkins loan is deferred, interest does not accumulate. Therefore, interest does not accrue on the loan amount if you need to defer payment because you re-enroll in school or experience some kind of financial hardship.

Cancellation of the Debt

One important note – if you financed your education with a Perkins Loan and are a teacher, you may be able to eliminate or cancel the debt if you teach a certain subject or have been teaching full-time in a school in a low-income area.

Choosing to Consolidate

Nevertheless, should you opt for obtaining a Federal Direct Loan for consolidation purposes, you have a variety of payment plans from which to choose, one of which you can fit into your budget in order to make it easier to pay back your debt.

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