So I was originally offered 3 loans by my university - subsidized, unsubsidized, and a Perkins loan. My mother applies for a Parent PLUS loan, just to see if she was eligible in case we ever needed it. She was denied. Next, my university canceled my Perkins loan and replaced it with an unsubsidized loan. I asked if this was a mistake, and if they could please revert it back and they replied:
“For new borrowers of the Perkins loan, eligibility can only be determined after all loans have applied. Since you still have additional unsubsidized loan that you are eligible to receive from the PLUS loan denial, Perkins is not eligible to be offered even if the unsubsidized loan is canceled.”
I was really hoping on cancelling a portion of the Perkins loan after college through service in the Peace Corp. Is there anything I could do? If my parent became eligible to take out a PLUS loan through a cosigner, would the additional unsubsidized loan be cancelled and would my Perkins loan return? If anybody has any ideas, please let me know. Desperate for some help
First of all since I’m a bit confused by your post, what is the cost for tuition, fees, room and board (if you are staying on campus)? How much aid in scholarships or grants were you offered?
How much is left to be covered by loans?
After the Perkins loan program was set to expire last year and was reinstated, my understanding is that new Perkins borrowers must exhaust all subsidized and unsubsidized loans first before they can get Perkins.
But I thought that referred to the max $5,500 loan amount.
If someone’s parents apply for Plus loan and are denied, the student can borrow additional $4,000 in unsub loan.
I did not know that the school could make the student take out that $4,000 before they can get Perkins.
Perkins like sub loan is based on need. So my understanding was that if student still had need after taking out $5,500 they could get Perkins.
You might want to talk with a FA supervisor and clarify. That does not seem right to me.
Here are the new rules:
Awarding Direct Subsidized and Unsubsidized Stafford Loans - An undergraduate student who was awarded a Direct Subsidized Loan and/or a Direct Unsubsidized Loan can decline one or both of the loans (or request a lesser amount). However, the student’s Direct Loan eligibility amounts must be included in the calculation of the undergraduate student’s Perkins Loan amount, regardless of whether they actually borrow that full amount.
When the parent applied for the Parent PLUS and was declined, the student became eligible for additional unsubsidized loans. At this point, the additional $4,000 is part of the student’s eligibility - although I don’t see anything in writing about this particular situation, I would agree that the school would need to include the additional eligibility in its calculations.
That said, if there is still some need remaining and the COA has not been met, it seems like the Perkins could stay … but the school may have a policy about awarding Perkins that is kicking in.
I would call to ask a supervisor if there is any way to get the Perkins. The worst they can do is say no … but they can’t say yes if you don’t ask.
The additional unsubsidized loan I was offered is in the same amount of my original Perkins loan. My financial aid package meets the cost of attendance. Because I am now offered an unsubsidized loan for the same amount as the original Perkins, I am now put in a worse position (higher interest rate, accruing interest, not possible to later cancel, ect)
My parent applied for the PLUS loan because my COA may soon rise due to a possible study abroad trip later in the year. We weren’t certain if we wanted to take out the money, but wanted the option available if necessary
Sometimes they do that for a one time computer purchase. Not sure if they can for study abroad.
If the study abroad is during a regular semester, wouldn’t your aid cover it?
I don’t think it’s true that Perkins has lower interest rate.
I thought it was 5% and Stafford loan rates are 3.76% now?
If your aid and $9,500 loans covers your COA, then that is pretty generous. I assume the COA includes items like books, transportation, personal expenses. You can try and be frugal with those and then you could borrow less in loans.
You can also work some this and future summers to earn some money and reduce amount to borrow.
I think there might be scholarships available for Pell eligible students that can be used for study abroad, ask your school.
The school has no choice but to operate within regulations. The new regulation that requires unsub eligibility to be considered before awarding Perkins is not the fault of the school - and as soon as you became eligible to borrow at the independent level (a result of a Parent PLUS denial), the school had to consider that additional unsub eligibility.
Perkins interest rate is higher than unsub, although it has the bonus of being a subsidized loan. One drawback to Perkins is that it can’t be included in an income driven repayment plan unless it is consolidated into a Direct Loan (thus often effectively cancelling out any perks of being a Perkins loan).
