Federal Perkins Loans
Please note: As of December 18, 2015, the Federal Perkins Loan Extension Act of 2015 went into effect and eligibility will be restricted. No Federal Perkins loans can be made to any student on or after October 1, 2017.
The Federal Perkins loan is a fixed-rate, low-interest loan from the federal government. Repayment on Federal Perkins loans disbursed prior to October 1, 2017 begins nine months after the borrower leaves school or drops below half-time attendance. The interest rate is fixed at 5 percent. For first-time loans disbursed after October 1, 1992, the borrower will make minimum monthly payments of $40. Perkins loans are subsidized by the Federal Government; interest will not accrue until repayment begins.
Repayment begins nine months after the borrower leaves school or drops below half-time attendance. The interest rate is fixed at 5 percent. For first-time loans disbursed after October 1, 1992, the borrower will make minimum monthly payments of $40. Annual awarding of Perkins loans is based on early application, continued demonstration of financial need, availability of federal funds, and maintenance of minimum academic standards. Because Perkins loans are subsidized by the federal government, interest will not accrue until repayment begins.
Annual and Aggregate Federal Perkins Loan Limits and Amounts
Up to $5,500 per academic year for freshman, sophomore, junior, and senior. $11,000 aggregate 0–62 credits, $27,500 maximum aggregate.
- Freshman: 0–30 credits
- Sophomore: 31–62 credits
- Junior: 63–96 credits
- Senior: 97+ credits
Rights and Responsibilities
Your Rights as a Federal Perkins Loan Borrower
You are entitled to:
- A promissory note, which must be returned to you when the loan is paid in full.
- A grace period—the exact length is shown on your promissory note.
- Know the total amount of your debt, principal, and interest, including your interest rate, total interest charges on your loan, and other fees that may be added if you violate terms.
- A loan repayment schedule that lets you know when your first payment is due, and the number, frequency, and amount of repayments.
- Know where to send your payments.
- A list of deferment and cancellation conditions, and the conditions under which the Department of Defense (if applicable) will repay your loan.
- An explanation of penalty-free prepayment.
- Forbearance, if your total loan debt is equal to or greater than 20 percent of your adjusted gross income.
Your responsibilities as a Federal Perkins Loan Borrower
- Sign a promissory note.
- Repay the loan even if you do not complete your education or are not satisfied with the education you received.
- Notify the Federal Perkins Loan Coordinator if you graduate, withdraw, take a leave of absence, drop below half-time status, transfer, change your name, address, or Social Security number.
- Repay your loan according to the repayment schedule.
- File properly for deferment or cancellation if you qualify.
Benefits of a Federal Perkins Loan
The Federal Perkins loan has many benefits that allow you to pay back your loan at a low interest, without fees. There are also many ways to become eligible for loan cancellation.
- The interest rate is fixed at 5 percent, substantially lower than that of other types of loans, and will not accrue until you make the first payment after your grace period.
- Compared to a loan forgiveness program (such as the PSLF program, which requires you to be in public service for more than 10 years in order for your loan balance to be cancelled), Perkins loans are eligible for Federal loan cancellation. This allows 50 percent of your original debt to be cancelled with three-year service as a teacher in certain areas or as a volunteer in the Peace Corps.
- There are many ways to cancel Federal Perkins loans.
- Perkins loans have a longer grace period than Stafford loans.
- There are no fees, unless you are late on a payment or make less than full payments.
- You can cancel the loan if you change your mind, even if you have signed the promissory note.