Starting in 1958, the U.S. government provided Perkins loans as a form of financial aid to higher education students. Under the Perkins Loan Program, low-interest loans were available to students with exceptional financial need. The educational institution’s own guidelines and information provided by the student on the Free Application for Federal Student Aid (FAFSA) were combined to determine this need.
Approximately 500,000 borrowers and 1,400 schools received loans from the Perkins Loan Program before it expired in September 2017. The final disbursement of funds was made in June 2018. However, many Perkin loan still remain outstanding and borrowers continue to make payments.
Perkins Loans: How They Worked
Perkins loans were granted by the financial aid office at the student’s educational institution. Typically, payments were administered as either a check to the student or as a deduction from institutional expenses and accepted academic costs. The government subsidized these funds by covering any interest accrued during the time the student was obtaining their degree. The school served as the lender so repayment was made directly to them.
In the Perkins Loan Program, borrowing limits varied based on the applicant’s financial situation, the school’s funding level, and the timing of the application. Students could borrow up to $5,500 per year for each year of undergraduate study—up to $27,500 in total—and $8,000 for each year of graduate or professional study—up to $60,000, including any undergraduate Perkins loans. Federal Perkins Loans were 5% interest-bearing and had a 10-year repayment period.
Like all loans, if a borrower missed a payment or paid it late, they would likely be charged a late fee or collection costs.
The federal government ended the loan program for budgetary reasons and due to calls for a more streamlined student loan program.
Perkins Loan Repayment
Since the program was discontinued only in 2017, there are still outstanding Perkins loans, which make up a portion of the $1.635 trillion in federal student loan debt held by 43.5 million borrowers.
It is important to pay back Perkins loans within ten years. For more information, contact your school’s financial aid office or loan servicer. If you are employed in a public service-related job, such as a public school teacher or a nurse, you may be eligible to cancel your loans after a certain number of years.
Consolidating your student loans, including your Perkins loans, will give you more repayment options based on your income.
Perkins loans do not qualify for the same repayment options as more recent types of loans. You must contact your school if you wish to repay your Perkins loan.
Forgiveness of Perkins Loans
If you have a Perkins loan, you may be eligible for a student loan forgiveness program if you work in one of the following public service job roles: teachers, early childhood education providers, staff at child or family services organizations, instructors at tribal universities or colleges, librarians with a master’s degree from a Title 1 school, firefighters, people serving in the military or law enforcement officers, nurses and medical technicians, early intervention services providers, lawyers employed as public defenders, speech pathologists with a master’s degree from Title 1 school, volunteers with VISTA or the Peace Corps.
Based on your job title and how long you have been there, you may be eligible for a different amount of forgiveness. If you teach special education, work in a school serving low-income families and children, or teach a subject like math or science that your state has determined is in need of qualified teachers, you may qualify for 100% forgiveness.
Depending on the job, years of service, and other factors, the Federal Student Aid Office provides online information about the percentage of funds that can be discharged (forgiven). The school that issued your Perkins loan will be able to provide you with applications and instructions based on the type of loan forgiveness you are seeking.
Comparison of Perkins Loans and Other Federal Student Loans
Even though the Perkins Loan Program expired, the U.S. Department of Education continues to offer the William D. Ford Federal Direct Loan Program to help students pay for higher education. Unlike the Perkins program, where educational institutions served as intermediaries and lent the money, the government makes loans directly to borrowers; hence the name “direct loans.”
As of 2023, there are four types of federal direct loans: direct subsidized loans, direct unsubsidized loans, direct plus loans, and direct consolidation loans.
Loans with direct subsidies
Applicants who demonstrate financial need at a college or career school may qualify for direct subsidized loans. Loan sizes increase with each year of school, starting at $3,500 and increasing to $5,500 for the third and beyond. “Subsidized” means that the federal government will cover interest charges for a certain period of time.
Unsubsidized Direct Loans
Undergraduates, graduate students, and professionals are eligible for direct unsubsidized loans, and financial need is not a factor in eligibility. For dependent undergraduate students, the loan amount increases each year, starting at $5,500 and rising to $7,500 by the third year. Graduate and professional students, as well as those over 24 years of age, are eligible for higher borrowing limits.
Loans through Direct Plus
In addition to other types of financial aid, Direct PLUS loans are available to graduate or professional students and parents of dependent undergraduate students. The loan is not based on financial need, but a credit check is required. Borrowers with adverse credit histories must meet additional requirements to qualify.
Loans for direct consolidation
Borrowers can consolidate all of their eligible federal student loans into a single loan through direct consolidation loans.
Perkins Loans: How Do I Know If I Have One?
Depending on your school, you may have been offered Perkins loans. If you are not sure what type of loan you have, you can log into the National Student Loan Data System to find out.
Perkins Loans: Do I Have to Repay Them?
Even though Perkins loans were discontinued by the federal government, you still owe the money unless you qualify for student loan forgiveness.
Stafford Loans: What Are They?
The federal government currently offers subsidized and unsubsidized Stafford loans.
In spite of the fact that Perkins loans are no longer offered, if you have one, you still need to pay it back. If your occupation qualifies, however, you may be able to have some of your debt forgiven.
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