Perkins loans, which were offered through the Federal Perkins Loan Program, are low-interest subsidized federal student loans for students with high financial need.
The Perkins Loan Program was discontinued in 2017. While these loans are no longer offered, borrowers who have Perkins loans are still required to repay them. These borrowers may also qualify for certain federal benefits like Perkins loan forgiveness.
Read on to learn more about repaying Perkins loans, federal Perkins loan forgiveness, plus current financial aid options to help make college more affordable.
Key Points
• Federal Perkins Loans offered a fixed 5% interest rate for students with exceptional financial need.
• Perkins loans were subsidized, and the government covered the interest while a borrower was in school.
• The Federal Perkins Loan Program was discontinued in 2017, but existing borrowers must still repay their loans.
• Perkins loan forgiveness is available for eligible public service workers, with up to 100% forgiveness over a five-year period.
• Although Perkins loans are no longer available, students can seek out alternative federal loans to help cover the cost of college.
Overview of Federal Perkins Loans
Students may choose to take out federal or private student loans to help pay for college. A type of federal student loan, Perkins loans were unique in that they were issued by schools. Federal Perkins Loans were intended for students with exceptional financial need and had a fixed 5% interest rate. Perkins loans were also subsidized, which means the government covered the interest that accrued while a borrower was in school.
The Perkins loan program allowed students to borrow the following amounts:
• $5,500 a year with a cumulative limit of $27,500 for undergraduates
• $8,000 per year for graduate students with a lifetime maximum of $60,000, including undergraduate Perkins loan debt
Repayment of Federal Perkins Loans
Federal Perkins loan borrowers are required to repay their Perkins loans plus interest within 10 years. That’s how college financial aid works in this particular instance.
Perkins loan borrowers had a nine-month grace period after graduating, leaving school, or dropping below half-time status before they needed to start repayment. Schools typically require monthly, bimonthly, or quarterly payments on Perkins loans.
These loans offer forgiveness and cancellation programs. Borrowers may be eligible for Perkins loan forgiveness if they work full-time in public service. Forgiveness through public service is available to those who hold such jobs as:
• Child or family services workers
• Educators
• Firefighters
• Law enforcement officers
• Nurses
• Members of the U.S. armed services
For eligible public service workers, up to 100% of their Federal Perkins loans may be forgiven over a five-year period. For more information on forgiveness, check out this student loan forgiveness guide.
If forgiveness isn’t an option, borrowers might qualify for cancellation of their Perkins loans in certain circumstances, including:
• Bankruptcy
• Total and permanent disability
• Death
• If your school closed while you were getting your degree
If one of these situations applies to you, you may be eligible for total and immediate discharge of your Perkins loans.
To apply for Perkins loan cancellation or forgiveness, contact your school’s financial aid office. They should be able to give you the appropriate forms to complete. If the school transferred your loans to a loan servicer, you can reach out directly to the servicer.
If you are not eligible for forgiveness or cancellation, you may want to consider the option of student loan refinancing. When you refinance student loans, you replace your old loans with a new loan that ideally has lower rates and more favorable terms if you qualify for them.
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Comparison with Other Federal Student Loans
Although Perkins loans are no longer available, there are several other types of federal loans that may help you cover the cost of college. Here’s how these loans compare to Perkins loans:
• Direct Subsidized Loans: Undergraduate students with financial need may be eligible for Direct Subsidized Loans. The school determines how much they can borrow with these loans based on the student’s Free Application for Federal Student Aid (FAFSA). Like Perkins loans, the federal government subsidizes Direct Subsidized Loans by paying the interest on them while the borrower is in school and during the six-month grace period after graduation.
For the 2024-2025 school year, federal student loan interest rates are 6.53% for undergraduate students. That’s higher than the 5% interest rates on Perkins loans.
• Direct Unsubsidized Loan: Undergraduate, graduate, and professional students are eligible for these loans, which are not based on financial need. Unlike Perkins loans, the interest on Direct Unsubsidized loans accrues while the borrower is in school and during the six-month grace period afterward. The borrower is responsible for paying that accrued interest.
• Direct PLUS Loans: These loans are for parents who borrow money for dependent undergraduate students, and for eligible graduate and professional students. Unlike most federal loans, Direct PLUS loans require a credit check.
Current Status of the Federal Perkins Loan Program
The Federal Perkins Loan Program was discontinued in 2017 after Congress failed to renew it. Even though these loans are no longer available, borrowers who have Perkins loans must repay them. Alternatively, they can apply for forgiveness or cancellation of Perkins loans to help with getting out of student loan debt if they are eligible.
Alternatives for Students
Even though borrowers can no longer take out Perkins loans, there are a number of other financial aid options for college students. These include:
• Federal Direct Loans: These loans offer helpful benefits for borrowers, including income-driven repayment and some forgiveness options. And as noted above, with Direct Subsidized Loans, the federal government pays the interest on the loans while the borrower is in school.
• Scholarships: This type of aid is considered gift aid because it does not need to be repaid. Scholarships can come from a wide variety of sources, including your state, certain businesses, and national and local organizations. Explore the different scholarships available to see what you might be eligible for.
• Grants: Many grants are need-based, and they typically do not need to be repaid. Grants may be available from the federal government or your state government.
• Private student loans: These loans are offered through private lenders, including banks and online lenders. The repayment terms and benefits vary from lender to lender, and the interest rates on these loans may be fixed or variable.
A lender will typically do a credit check and review your financial history before approving you for a private loan, so it may be beneficial to have a student loan cosigner in order to qualify. It’s also important to be aware that private loans do not provide access to federal income-driven repayment plans and forgiveness programs.
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The Takeaway
Federal Perkins loans are no longer available, but borrowers who have these loans must still repay them. If you have a Perkins loan you’re working to pay off, you can look into Perkins loan forgiveness and cancellation to see if you might be eligible.
Another option to consider is refinancing your Perkins loan, especially if you can qualify for a lower interest rate or better terms. Refinancing these loans means you’ll no longer be eligible for federal Perkins loan forgiveness, however, so make sure you won’t need to take advantage of that program.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Who is eligible for Federal Perkins Loans?
Federal Perkins loans are no longer available because the program was discontinued in 2017. However, there are other types of student loans you may be eligible for, including Federal Direct Subsidized and Unsubsidized Loans, as well as private student loans.
What is the interest rate on Federal Perkins Loans?
All Federal Perkins loans have a fixed interest rate of 5%. In addition, Perkins loans were subsidized, which means that the federal government paid the interest on the loans while borrowers were in school.
Are Federal Perkins Loans still available for new borrowers?
No, Federal Perkins Loans are no longer available. However, there are several other federal loan options for new borrowers, including Federal Direct Subsidized and Unsubsidized loans, that come with certain benefits such as access to federal programs such as income-driven repayment plans.
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