Guide to the Federal Perkins Loan for Students

Needs-Based Loan Overview for College and Grad School Students

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Federal Perkins loans were one of the most popular types of student loans for students with high financial need. Until 2018, students attending any one of approximately 1,700 participating postsecondary institutions nationwide could obtain Perkins loans through their school. If approved, the school applied your loan funds to your school account to pay for tuition, fees, room and board, and other school charges. If any loan funds remained, your school issued you a refund to help pay for your other education expenses.

The federal Perkins loan program ended in 2018, with the last loans disbursed in June of that year. Many students are still paying back Perkins loans, however.

What Federal Perkins Loans Were

Perkins loan funds depended on your financial need and the availability of funds at your college. To be considered for a Perkins Loan, you must have demonstrated an exceptional financial need on your Free Application for Federal Student Aid (FAFSA). This form is required to determine your eligibility for other financial aid programs as well and can be renewed each year. In addition to the FAFSA, students had to fill out a Perkins promissory note in order to qualify for a loan.

The program was originally set to expire in 2014, but it was granted two different extensions. It was eventually put on hold in 2017 when Congress could not agree on new legislation to extend funding for the program. No specific program has replaced the Perkins loan program since then, but the College Affordability Act, under consideration in Congress in 2020, proposes new funding for Perkins loans.

Rates, Fees, and Borrowing Limits

The maximum amount you could receive for a Perkins loan depended on whether you were an undergraduate or graduate student. For undergraduate students, there was a $5,500 per year cap on Perkins loans, with a cumulative limit of $27,500. For graduate students, there was an $8,000 per year cap on Perkins Loans, with a graduate and undergraduate combined cumulative limit of $60,000.

A student who had borrowed $25,000 over four years as an undergraduate student would have been limited to borrowing another $35,000 as a graduate student.

Perkins Loans came with a fixed interest rate of 5%. All Perkins loans were subsidized loans, which means that the interest was paid by the government until graduation for any student who was enrolled in a participating academic program at least half-time. Perkins loans did not have any loan or loan origination fees, nor did they carry any prepayment penalties.

Repaying Outstanding Federal Perkins Loans

After graduating or dropping below half-time enrollment, students enrolled in the Perkins loan program received a nine-month grace period from making payments, after which they would need to begin paying down their own balance.

Perkins loan repayment plan options are not the same as those for other student loan options. These loans were typically serviced directly by participating schools or by a third-party organization that handled billing and other services. If you are uncertain who is handling your Perkins loan repayment program, contact your school for more information.

If you skip a payment, if your payment is late, or if you make less than a full payment, you might have to pay a late charge plus any collection costs. Borrowers who are still experiencing financial difficulty after payments begin will need to contact their college or loan servicer to determine if they are eligible for loan deferment or forbearance.

Perkins Loan Forgiveness and Consolidation

In some cases, you may be eligible to have all or some of your Perkins loan forgiven. If you perform certain teaching services at low-income schools or you have other public of military employment, you should ask about whether loan cancellation is an option for you. Additionally, although the CARES Act did not include payment forbearance for Perkins loans, some schools may be offering this assistance during the COVID-19 pandemic.

Perkins loans may also be consolidated with other federal student loans into a direct consolidation loan, but there is a catch. If you decide to go this route, you will lose your Perkins loan benefits and potentially receive a higher interest rate. If you're having trouble paying back your Perkins loan, be sure to weigh your options carefully.