Guide to the Federal Perkins Loan for Students

Needs-Based Loan Overview for College and Grad School Students

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While you might be aware of federal Direct Subsidized or Unsubsidized Student Loans and PLUS Loans, you might not be aware of another low-interest federal student loan program for individuals with a higher degree of financial need—the Federal Perkins Loan Program. Students attending any one of approximately 1,700 participating postsecondary institutions nationwide can obtain Perkins loans, with the school serving as their lender. If approved, the school will apply your loan funds to your school account to pay for tuition, fees, room and board, and other school charges. If any loan funds remain, your school will issue you a refund to help pay for your other education expenses.

Federal Perkins Loan Borrowing Limits

The maximum Perkins Loan amount students can receive in any one year is determined by whether they are undergraduate or graduate students. For undergraduate students, there is a $5,500 per year cap on receiving Perkins Loans, with an undergraduate cumulative limit of $27,500. For graduate students, there is an $8,000 per year cap on Perkins Loans, with a graduate and undergraduate combined cumulative limit of $60,000. For example, a student who had borrowed $25,000 over four years as an undergraduate student would be limited to borrowing another $35,000 as a graduate student.

Interest Rates and Fees for Federal Perkins Loans

The current interest rate on Perkins Loans is 5.00%. All Perkins Loans are subsidized loans, which means that the interest is paid by the government until graduation for any student who is enrolled in a participating academic program at least half-time. Perkins Loans do not have any loan or loan origination fees.

Repaying Federal Perkins Loans

Following graduation, students will usually receive a nine-month grace period from making payments. Perkins Loan repayment plan options are not the same as those for other student loan options. Your loan servicer will most likely be the school you attended when you received the loan but, in some cases, the school will have a separate organization handling the billing and other services for your Perkins Loan. Contact your school directly with questions about making Perkins Loan payments.

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. If you go on to perform teaching services at low-income schools, you may be eligible for loan cancellation under certain circumstances. Perkins Loans may be consolidated with other federal student loans into a Direct Consolidation Loan.

Applying for a Federal Perkins Loan

To be considered for a Perkins Loan, you must demonstrate an exceptional financial need on your Free Application for Federal Student Aid or FAFSA. Completing this form will help determine your eligibility for other financial aid programs as well. Once completed, the FAFSA is forwarded to your school, which will then inform you of your Perkins Loan eligibility. Funds depend on your financial need and the availability of funds at your college, so it is best to apply for financial aid as early as possible. Completion of the FAFSA and a Perkins promissory note is required to be considered for a Perkins loan.