Difference between a Perkins and a Stafford loan?

<p>Son applied to five Texas schools, 3 private, 2 public and FA packages are beginning to trickle in. Of course Texas is trying to plan a budget that intends to get rid of most state aid for college, at least for incoming freshmen, it would be really bad on those almost done to find out all of a sudden there is no money to finish with. Laying aside the fact that I don’t understand how our governor can say on the one hand, education is very important, we need more Texans with college degrees and yet want to cut the very programs that help (and our state grant programs are not that good compared to other states) make that possible, the fact remains students have to commit by May 1st and the final legislation is not supposed to be known until sometime this summer, leaving the FA offices in a fine mess. </p>

<p>Son has heard from 3, two private and yesterday, A&M College Station. One private left out the disputed funding, admitting it’s a large part of their FA, and stating that if it’s not cut, they’ll adjust packages this summer, but advising students to commit with the package as is. (This is Baylor and the aid package as is, is not doable for us, so they’re off the table, which is sad, as son liked them a lot). The other private, left the disputed funding in with a letter stating that if it is cut, the institution would most likely not be able to make it up. Son is in the running for a competitive scholarship there with an April 1st deadline and if that were to come through there is a slight possibility this package is doable, but the scholarship is only for two years, so we’ll have to take that into account.</p>

<p>So far A&M has given the best package (of course it’s his least favorite school due to the size), they also left out the disputed funding, but COA is lower (we are 0 EFC), they only gapped $1982, which they provided a parent plus for, and they gave the maximum subsidized and unsubsidized Stafford and a $750.00 per semester Perkins loan. No work study, (he checked not sure on the FAFSA, as he’s an intended engineering major and I wasn’t sure about the feasibility of handling the freshman engineering weed-out classes w/a job) and the rest in a scholarship and institutional money. Since this is my second, I know the COA has some wiggle room in there, (for A&M I’m not sure how much), so my thought is to skip the parent plus (due to job uncertainly I know I’d be denied, and I wouldn’t want him taking the additional unsub, I think I can directly give him what the monthly payments would amount to, as with no kids at home there are cuts that adults can do, that I wouldn’t ask my kids to do), take the subsidized loan, leave the unsub, (I know we can add it back if he needs it during the semester) and with some work his summer he should manage. But what is a Perkins loan? It was not in the 2 private school packages, is it a public school only thing? Daughter has never had one in her FA package either. Is it subsidized?, carry a low interest rate? What is the difference between it and the Stafford?
We still have one Texas private, and a UT branch school where he interviewed for the honors program to hear from in-state and an OOS private to hear from, along w/2 OOS publics that we have gotten prelim reads on and I know they will also be options, but I really feel for the kids who had only Texas public schools and no financial safeties on their list. We have several in son’s scout troop and I tried to talk to them and some parents about the need to include some other schools on their list, but didn’t make much headway. Their parents didn’t see the need, don’t peruse CC and don’t have good GC advice from their school, so I’m thinking many will be out of luck or attending junior college. We’re not talking tippy-top kids here, but they’re not slackers by any means, and it’s a shame good solid kids are going to be out of luck this fall. I might suggest a gap year to a couple, but who knows if it will get any better next year.</p>

<p>A Perkins loan is another federally funded loan. The interest rate is good and like the Stafford loans, they are in the student’s name and the payments are deferred until after the student graduates or leaves college. Most Perkins loans are awarded to students whose incomes are on the low end for the school they are attending. The amount you are quoting is an additional $1500 for this year in loans. That would mean the Stafford/Perkins total would be $7000. </p>

<p>Just be mindful over the four years of the total loan amounts your student takes. $1500 a year would be $6000 total for the four years…added to the Stafford amounts of $5500, $6500, $7500, $7500 for the each of the four years. Grand total $33,000 for the four years. The payback would be about $350 per month for 10 years.</p>

<p>The Perkins loan is a federal loan. It is campus based aid, like SEOG and work study. Campus based aid has very limited funding. A school is given $xxx in funds and once they have used those funds they can get no more. Schools usually set their own criteria for awarding the very limited campus based aid funds. Some schools do not have perkins funds. Those that do have limited funds and the funds may vary from year to year. (My daughter had received perkins of varying small amounts some years and not in others - her EFC and need have been about the same each year).</p>

<p>The Perkins loan is currently a subsidized loan. It is need based. the interest rate is 5% and it has a grace period of 9 months. It has no origination fees. The last couple of year there has been talk of changing the Perkins loan into an unsubsidized loan.</p>

<p>Yeah, I want to watch those totals, which is why I’m thinking the subsidized Stafford and the Perkins since from what you’re saying is currently subsidized. We’ve managed to get daughter through with only subsidized Stafford and $1000.00 unsub (for a summer semester which turned out not to fulfill the purpose we needed it to) which I do pay the interest on quarterly. Both kids can count on their granddad slipping them cash every-time they come to town, plus other relatives are good about sending cards with little giftcards to Sonic, Dollar Tree, Walmart etc… to daughter and I figure they’ll do the same for son. Not much $10.00 here, $15.00 there but it all helps. </p>

<p>I wish son could do without the full subsidized Stafford and the Perkins, but without the Texas Grant being available, he doesn’t have much choice. Daughter didn’t need full sub Stafford freshman or sophomore year, but has had to use the full sub for junior and will for senior year and I’d like for son not to end up with anymore loan debt than daughter but that may be be possible. </p>

<p>If they make the Perkins unsub in the future, think you can pay the interest as it goes like you can for the unsub Stafford?</p>

<p>Who knows with the way financial aid seems to be heading right now. I would guess yes, but my logic and government logic tend to not be on the same page. </p>

<p>The thing with Perkins is you may not be able to depend on it every year. My daughter’s Perkins have been completely different each year. One year she did not get it and half way through the year they suddenly offered her $200. One summer she got Perkins for summer school, last year she did not. It all seems to depend on what their current funding is. I read somewhere once that as Perkins loans are repaid to the schools they can use them to fund new Perkins loans. I don’t know if that is accurate or not.</p>