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Perkin Loan

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A Federal Perkins Loan, or Perkins Loan, was a need-based student loan part of the Federal Direct Student Loan Program, offered by the U.S. Department of Education to assist American college students in funding their post-secondary education. The program was named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.

Perkins Loans were eligible for Federal Loan Cancellation for individuals choosing to work in a number of different public service occupations including early childhood education, elementary and secondary school teaching, speech therapy, nursing, law enforcement, librarian, public defense attorney, fire fighting and certain active duty military postings.[1] Depending on the field of employment, further restrictions on the setting of employment may apply. For example, forgiveness for teachers may be restricted to designated low-income schools or specific teacher shortage areas such as math, science, and bilingual education and forgiveness for nurses requires employment at a non-profit medical facility. A percentage of the loan was cancelled for each year spent teaching full-time (as long as the loan remains in good standing). This cancellation also applies to Peace Corps Volunteers. Cancellation typically occurs on a graduating scale: 15% for year 1, 15% for year 2, 20% for year 3, 20% for year 4, 30% for year 5. These percentages were based on the original debt amount. Thus after 3 years of service, one would have 50% of their original debt cancelled.[2]

The federal Perkins loan was an appealing option for undergraduate and graduate students who showed exceptional financial need when looking to pay for school. But as of Sept. 30, 2017, new Perkins loans are no longer available. They featured a fixed 5% interest rate and, at nine months, a longer grace period than other student loans. What made them particularly unique is that the schools that participated in the program would provide a portion of the loan and the borrower would typically repay the school directly.

A Perkins loan is a need-based student loan that had a fixed interest rate of 5% on a 10-year repayment period. The Perkins loan was subsidized by the federal government, which meant interest did not accrue during the nine-month grace period associated with the loan. Borrowers could choose to start repaying the loan on the 10th month after they graduated, withdrew or dropped out from their school, or fell below half-time student status.

There are two important differences between the Perkins loan and other federal student loans. First, the money for Perkins came primarily from the government, but there were approximately 1,700 schools that would contribute a portion as well. The schools would send their borrowers a check for the loaned funds, or simply credit their accounts, typically in two installments throughout the academic year.

The other difference? Perkins loans were typically repaid to the school or a servicer that worked with the school, as opposed to the dozen federal student loan servicers that act as a go-between for borrowers and the Department of Education.

Undergraduate and graduate students who demonstrated exceptional financial hardship were eligible for the Perkins loan until Sept. 30, 2017. As with other forms of federal financial aid, students needed to first fill out the Free Application for Federal Student Aid, or FAFSA.

Undergrad borrowers were limited to $5,500 per year, with a cumulative limit of $27,500. Graduate students were allowed $8,000 per year with a total limit of $60,000, including any undergraduate Perkins loan debt.

Those who were in favor of letting the Perkins loan program expire hoped to simplify and centralize federal student loans, while those who wanted to keep it were concerned about preserving low-cost options for the neediest borrowers.

If you're looking to have your Perkins loans forgiven, canceled or discharged, you may have options, but only if you're not in defaul


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