What were Perkins loans? Are they still available?

The U.S. Department of Education launched the Federal Perkins Loan Program over 60 years ago and disbanded it in 2017. This loan program offered a groundbreaking opportunity for low-income students pursuing higher education.

While you can no longer get a new Perkins loan, existing Perkins loans are eligible for many forms of federal student loan forgiveness.

Here’s how Perkins loans worked.

Perkins loans were federal student aid providing low-interest loans to assist undergraduate and graduate students with serious financial needs. These loans were disbursed from your school rather than the government or a private lender.

Perkins loan terms:

• Interest rate: 5% (fixed)

• Interest type: subsidized

• Grace period: 9 months

• Repayment period: 10 years

• Payment terms: option for quarterly or monthly payments

• Origination fees: none

• Max loan amounts:

• Undergraduate: $27,500 ($5,500 per year)

• Graduate: $60,000 ($8,000 per year)

The fixed interest rate on Perkins loans was 5%, regardless of the loan amount or your income. Perkins loans were subsidized, meaning the federal government paid interest on the loan while borrowers were still in school.

As a qualifying applicant for a Perkins loan, you could borrow up to $27,500 as an undergraduate student and up to $60,000 as a professional graduate student pursuing a master’s degree. That translated to $5,500 per year for undergraduates and $8,000 per year for graduate students.

Your college’s financial aid administrator determined your actual loan amount based on what other aid you were receiving.

This need-based student loan didn’t require you to start repaying it until 9 months after you dropped below half-time enrollment. This nine-month grace period is different from the traditional six-month period of most student loans.

The longest loan repayment term on a Perkins Loan was 10 years. However, if you consolidated your Perkins loans, the repayment term for that money may now be different.

Is the Perkins loan still available? No. The U.S. government ended the Federal Perkins Loan Program on September 30, 2017. Schools could no longer offer students federally subsidized Perkins loans after that date.

Read More: The Ultimate Guide To Student Loan Consolidation

During the COVID-19 pandemic, most student loan borrowers have been exempted from monthly payments, and their debts have not accrued interest. Repayment begins after August 31, 2022.

But Perkins loans are a bit different.

If the federal government now holds your Perkins loans, your payments and interest may be automatically suspended with other federal loans. If your loan is still held directly by your school, the school had the option to suspend payments throughout the pandemic.

The federal government gave permission to schools to grant three-month forbearance periods to Perkins borrowers struggling financially due to COVID-19.

In January 2022, the Office of Federal Student Aid announced it would also waive the three-year forbearance limit on federal Perkins loans from March 13, 2020, “during the duration” of the COVID-19 emergency.

While the lender for a Perkins loan was the federal government, the loans were disbursed by your school and may be serviced by the school or a loan servicer the school chose. The school or external servicer handles processing and loan repayments for Perkins loans.

If you received a student loan through your school at a 5% interest rate, it was probably a Perkins loan — especially if you’re repaying the school rather than the government or a private lender.

Applicants with exceptional financial need were eligible for a Perkins loan. Your school used your FAFSA application to determine your level of financial hardship.

While eligibility conditions for other financial aid options like Stafford loans are consistent, Perkins loans were different. The qualifications for receiving a Perkins loan were not the same for every applicant. Instead, each school established its own eligibility criteria.

Schools typically considered the family’s annual income, your contributions to your tuition, and other factors noted in your FAFSA to determine eligibility.

The Federal Perkins Loan Program was in a slow decline since 2010 as potential borrowers increasingly favored other loan options with lower interest rates and better terms. The U.S.’s oldest student loan program had been surpassed by other options for low-income students, including Direct loans through the U.S. government.

What had been a groundbreaking financial assistance option in 1957 had become eclipsed by many other programs. That’s why the government shut down the Perkins program in 2017 after it failed to renew in Congress or receive enough federal funding to continue.

Final disbursements were completed by June 30, 2018.

Do Perkins loans have to be repaid? Yes, federal law requires loan borrowers to repay Perkins loans even though the Federal Perkins Loan Program ended in 2017. However, Perkins loan borrowers qualify for loan forgiveness programs, forbearance, and deferment in specific circumstances.

Perkins loans cannot use income-driven repayment (IDR) plans to reduce monthly payments. Once you drop below at least half-time schooling, you’ll have a nine-month grace period before you must begin repaying your loans.

The minimum monthly payment you can get for your federal Perkins loans is $40/month.

If you have a Perkins loan and can’t make your payments, you have two options:

1. Request a 10-year extension on your loan repayment. You must qualify as a “low-income individual” based on 34 CFR § 674.33 (c)(2) of the federal Perkins loan program code.

2. Consolidate your loan to access income-driven repayment. Once you consolidate your Perkins loan (by itself or with other federal loans), it becomes a Direct Loan and qualifies for IDR plans like income-based repayment.

Learn More: Income-Driven Repayment Plan Forgiveness

Perkins loans do not qualify for most loan forgiveness programs. If you consolidate your Perkins loan into a Direct Consolidation Loan, you can access programs such as PSLF (public service loan forgiveness).

Some teachers qualify for Perkins loan forgiveness without consolidating.

You may be able to have your Perkins loan fully discharged due to bankruptcy, school closure, or certain significant disabilities.

If you’re a teacher…

The Perkins Loan Program was the first program to provide teachers with cancellation (i.e., loan forgiveness). Teachers must work in low-income school districts (Title I schools) to qualify.

More specifically, teachers have to work:

• full-time

• in designated elementary or secondary schools

• that serve students from low-income families.

Related: Check if Your School or Educational Service Agency is a Title I School

Full-time special education teachers also qualify for Perkins loan forgiveness, even if they don’t work for a Title 1 school. If you teach children with disabilities in a public or nonprofit elementary or secondary school, you are eligible for Perkins loan forgiveness.

And if you’re a full-time faculty member at a Tribal College or University, you can also qualify for Perkins loan cancellation.

Finally, you can qualify if you’re a full-time teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas.

Perkins Loan Cancellation for Teachers covers teaching periods that started on or after August 14, 2008.

Remember that qualifying for Perkins loan forgiveness doesn’t necessarily mean a full discharge of your entire debt. Repayment cancellation for Perkins loans follows a graduating scale, eliminating a higher percentage of your original debt with each additional year of service.

If you work in other public service or a government organization…

Aside from being a teacher, you can get your Perkins Loan canceled if you work full-time as a:

• qualified professional provider or early intervention service provider for the disabled;

• employee (often a social worker) of a public or nonprofit child or family service agency providing services to high-risk children and their families from low-income communities;

• nurse or medical technician;

• law enforcement or corrections officer;

• staff member in the education component of Head Start;

• Vista or Peace Corps volunteer;

• active duty armed forces service member in a hostile fire or imminent danger pay area

• member in a pre-kindergarten or child-care program that’s licensed or regulated by a state;

• firefighter for a local, state, or federal fire department;

• speech pathologist with a master’s degree working in certain elementary or secondary schools;

• librarian working in certain schools or public library serving Title I schools; or

• attorney employed in public or community defender organization.

If your occupation is not on the above list, but you work for a nonprofit or government organization, consider consolidating your Perkins loans to access Public Service Loan Forgiveness (PSLF).

This program allows for loan forgiveness after 10 cumulative years of full-time public service in a qualifying occupation.

Related: Limited PSLF Waiver Explained: What It Is & How To Qualify 

Other federal programs can help you if you’re still attending school and need financial assistance. Current federal programs offering financial aid to students include:

• Federal Pell Grants: Given to low-income undergraduate students; do not need to be repaid.

• Direct PLUS Loans: Given to parents of students or graduate students to pay for tuition.

• Family Federal Education Loans (FFEL): In the form of subsidized and unsubsidized Stafford loans, FFEL PLUS loans, or consolidated loans.

• Federal Supplemental Educational Opportunity Grants (FSEOG): Administered through the financial aid office of participating schools. Granted based on your financial need; do not need to be repaid.

• Federal Work-Study Program: Provides funds for part-time employment during enrollment in higher education.

Defaulting on your student loans can put you in an even tougher spot. We want to help you get out of your debt cycle, whether that’s facilitating a loan rehabilitation arrangement or negotiating a payoff.

The good news is that even if you have defaulted on your Perkins loans, you may be eligible for forgiveness.

As a student loan lawyer, I assist borrowers like you seeking Perkins loan cancellation, lower monthly payments, and better repayment options. I can even help if your student loans go to collections.

Schedule a call with me to explore your loan forgiveness, consolidation, and repayment options. You can also sign up for my weekly emails to receive more useful advice on overcoming your student loan debt.