The U.S. Department of Education offers several loan programs to place an affordable education within your reach. The Federal Perkins Loan Program provides assistance to qualifying students who can demonstrate financial need and who are seeking a higher degree through an approved postsecondary school. With low fixed interest rates and manageable repayment terms, Perkins Loans allow needy students to finance the rising costs of a higher education. Perkins Loans can be used to cover education-related expenses such as tuition, books, a computer, and housing.
Perkins Loans are sponsored by the federal government, which allocates funds to participating schools. These funds are then disbursed to students through the educational institutions, which match a certain percentage of the funds. If you qualify for a Perkins Loan, your lender will be the school that you’re attending. Because they act as lenders and match federal funds, participating schools can play a role in determining which students receive a Perkins Loan and how much is offered.
Who is eligible for a Perkins Loan?
Low-income students enrolled in an undergraduate, graduate, or vocational program at an institution that participates in the Perkins Loan Program are eligible to receive the Perkins Loan. Not all schools offer Perkins Loans, so it’s important to consult with your school’s financial aid office to find out which programs are available. Students must be able to demonstrate financial need in order to qualify.
Compared with other federal loan programs, like the Direct PLUS and Subsidized and Unsubsidized Loans, very few Perkins Loans are issued each year. According to the New America Foundation, only half a million dollars in new Perkins Loans were issued in 2014, with an average loan amount of $1,700. By comparison, approximately $8 million in new Direct Subsidized Loans were issued, with an average loan of $3,250.
- How much money you need to cover tuition and other college expenses
- The funds available at your educational institution
- The financial aid you’re receiving from other grants, loans, or scholarships
- Your academic status (undergraduate versus graduate or professional)
Undergraduates can borrow up to a total of $27,500 in Perkins Loans with an annual maximum of $5,500. Graduate students and students in professional degree programs can borrow up to a total of $60,000. The total loan for graduates includes any Perkins Loan funds borrowed as an undergraduate.
The funds you receive from your Perkins Loan will automatically be applied to your academic expenses, such as tuition, registration fees, and on-campus housing. After covering these expenses, your school will issue you a refund if any funds remain. It’s important to remember that any money refunded to you must also be repaid.
What about repaying the loan?
You will be responsible for repaying a Perkins Loan at an interest rate of 5 percent, with a repayment period of up to 10 years. If you make your payments consistently and on time, there will be no other charges for this loan. However, if you are late on payments or default on your Perkins Loan, you will be charged late fees. You may also be charged extra fees for collection.
After you complete your degree, you will have a grace period of nine months before you have to start repaying your loan, provided that you’ve been attending school at least half-time. The same grace period applies if you drop out of school or leave for any other reason. If you are unable to start making payments at the end of the grace period, or if you’re financially unable to afford your payments in the future, you can apply for a deferment to postpone repayment temporarily.
The sooner you start repaying your loan, and the larger the payments you make, the more money you’ll save in terms of interest. Paying back your student loan promptly also helps you maintain a strong credit rating as you move forward into the future.
What are the advantages of a Perkins Loan?
Low fixed interest rates make Perkins Loans desirable. Even if national interest rates rise, the rate on your Perkins Loan will remain the same, as long as you meet the conditions of repayment. Loan insurance is available at no cost, so if you were to die or become unable to work because of an illness or injury, the insurance could repay your loan. In addition, loan forgiveness programs make it possible to reduce the size of your loan if you commit to working in certain professions.
How do I apply?
You can apply for a Perkins Loan by filling out the Free Application for Federal Student Aid (FAFSA). The earlier you apply for a Perkins, the greater your chances of receiving one. Perkins funds are limited and awarded on a first come, first served basis.
What if I need to cancel my loan?
If you decide not to enroll in school after you’ve been awarded a Perkins, or if you no longer need the money, you can cancel the loan by contacting your school’s financial aid department. Your loan can be cancelled even if part of the money has been disbursed, but there are deadlines for full or partial cancellation. Review your loan agreement carefully for the terms and conditions of cancellation.
A Perkins Loan that has already been disbursed can be cancelled at 100% in only a few conditions:
- The borrower dies
- The borrower becomes completely disabled
- The program closes before the degree is completed
- The borrower declares bankruptcy (This is extremely rare, but in some cases, a court can discharge student loan obligations if repayment would cause extreme hardship to the borrower.)
Working in specific professions or in high-risk areas may allow you to qualify for loan forgiveness. Between 50% and 100% of a Perkins Loan can be forgiven if you work in one of these areas:
- U.S. Armed Forces, serving in active duty in a dangerous location
- Firefighters working full-time
- Law enforcement or correctional officers working full-time
- Teachers working full-time in high-need areas or in special education
- Nurses or medical technicians working full-time
- Masters-prepared librarians working in high-need areas or public schools
- Attorneys working in public defense or community service
- Social workers working with the disabled or with children in low-income communities
- Educators working full-time in a Head Start program
To qualify for loan forgiveness, you must commit to working in the specified area or profession for a certain period of time. Any Perkins Loan borrower is eligible for loan forgiveness, regardless of when the loan was made, as long as the work was performed after 1998. If you need to apply for loan forgiveness or cancellation, contact the institution that is servicing your loan to start the process.
What’s the next step?
Once you’ve determined that the school you’re attending participates in the Perkins Loan Program, you can apply for a Perkins Loan by completing the FAFSA. Filling out this form allows you to apply for other forms of financial aid, such as Direct Loans or Pell Grants. In some states, you can also apply for state-issued student loans or grants by completing the FAFSA.
Financial need shouldn’t be a barrier to achieving the education you want. It’s not easy to qualify for a Perkins, but if you meet the program’s financial requirements, this low-interest loan can help you reach your academic and professional goals.
Perkins Loan Eligibility
In order to be eligible for a Perkins Loan, students must demonstrate exceptional financial need. In addition, the student must demonstrate financial need after all forms of assistance, including scholarships and grants, have been taken into consideration.
You may have your Perkins Loan discharged if you can prove that you are permanently or totally disabled. If you are a U.S. veteran, documentation from the Department of Veterans Affairs can certify that you are unable to be employed due to a service-related disability. Proof of disability can also be in the form of a certification from the Social Security Administration, attesting that your next disability review will be between five and seven years from your most recent review, provided you are receiving benefits from Social Security Income or Social Security Disability Insurance. Finally, a physician can certify your permanent disability, stating that significant productive activity would result in death, and that the mental or physical disability has persisted for at least 60 months or can be expected to persist for at least 60 consecutive months.
How Are Recipients Selected?
Applicants must meet all eligibility requirements for the Perkins Loan; this means they must be enrolled at least part-time at a school that takes part in the Perkins Loan Program, and they must demonstrate exceptional financial need. Provided all eligibility requirements are met, recipients are selected at the discretion of the school’s financial aid office. It’s worth your time to contact your school’s financial aid office with any specific questions regarding the selection process.
If you are granted a Perkins Loan, the school you attend will receive the funds and apply them toward your education-related expenses. This includes tuition, associated fees, and room and board. If there are leftover funds, the school may give you the remaining money to cover other school-related expenses, such as the cost of books or supplies.
Are Perkins Loans still being funded?
Yes, however, funds are limited so not everyone who qualifies for a Perkins Loan will receive one.
How does a bankruptcy affect my Perkins Loan?
In some, albeit rare, cases, Perkins Loans may be discharged in bankruptcy court. You must prove to the court that repaying your loan would result in undue hardship.
What if I can’t keep up with my payment schedule?
Repayment terms for Perkins Loans vary according to school. If you have trouble keeping up with your repayment schedule, contact the school where you received your Perkins Loans. They will be able to discuss your repayment options with you, including possible consolidation or alternative repayment plans.