Federal Perkins Loan

Federal perkins loan program aims to provide assistance to qualify the students who can demonstrate financial need and who are seeking a higher degree through an approved post secondary school. Learn more on how to apply for Perkins loan, advantages, how to repay Perkins loans and much more.

Updated by Priya shah on 11th February 2020

Several loan programs are offered by the U.S. Department of Education in order to place an affordable education within your reach. The federal Perkins loan program aims to provide assistance to qualify the students who can demonstrate financial need and who are seeking a higher degree through an approved postsecondary school. Every borrower does wish for the low-interest rates, with a low fixed interest rate and manageable repayment terms, Perkins loans allow needy students to finance the rising costs of higher education. 

These perkin loans are to be used to cover education-related expenses such as tuition, books, a computer, and housing.

Perkins loans are sponsored by the federal government, which allocates funds to participating schools. These funds are then disbursed to students through the educational institutions, which match a certain percentage of the funds. If you qualify for the Perkins Loan, the school that you are in will act as a lender and match federal funds, other participating schools can play a role in determining which students receive a Perkins Loan and how much is offered.

These perkin loans are to be used to cover education-related expenses such as tuition, books, a computer, and housing.

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Is the Federal Perkins Loan Program still available?

Technically, this federal Perkins loan program is almost ended up to now but as schools that participate in the Perkins Loan program lose the authority to award and disburse new loans. UW-Madison will remain the servicer and collection agent until all borrowed funds have been repaid.

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.

Which are the schools that accept Perkins loan?

As not all schools offer the Perkins loans. So it is important to consult your school financial aid office to find which programs are available and best suitable for u. Mostly Low-income students enrolled in an undergraduate, graduate, or vocational program at an institution that participates in the Perkins Loan Program are eligible to receive the Perkins Loan. And also the student must be able to demonstrate financial need in order to qualify. 

After comparing the Perkins loan with other federal programs like direct plus and subsidized and unsubsidized loans, very few numbers are issued each year. According to the new American foundation, only half-million dollars in new Perkins loans were issued in 2014, which was an average loan amount of $1700. That is approximately $8 million in new direct subsidized loans were issued, with an average loan of $3250.

What are the advantages of a Perkins loan?

Perkins loan has a low fixed interest rate that makes it more desirable. The best part of perkin loan is if the national interest rate increases, the rate of Perkins loan will be the same as it was, as long as you meet the conditions of repayment. In addition, they offer loan insurance at no cost, so in future hope not to but if you were to die or become unable to work because of an illness or injury, the insurance can repay your loan. Loan forgiveness programs make it possible to reduce the size of your loan.

How to apply for Perkins loan?

The first step in applying for any federal student loan or Perkins loan is by filling out the free application for federal student aid(FAFSA). The sooner you apply, you will increase the chances of receiving one. Perkins funds are limited and are difficult to qualify, Kind of first come first serve.

What about repaying the loans?

If you are the one borrowing the loan obviously you will be repaying the loan back. An interest rate on Perkins loan for repaying is 5% with a repayment period of up to 10 years. If you pay the loans on time you won’t have to make the extra payments and no other charges will be implied for this loan. However, if you are late on your payments you will be charged an extra fee. 

After the completion of your degree, you have a period to repay the amount that is grace period and the grace period depends on the loan servicer that can vary from 6 months to 12 months. The same grace period is applied if you drop out of school or leave for any other reason.  If you are unable to start making payments at the end of the grace period, or if you’re financially unable to afford your payments in the future, you can apply for a deferment to postpone repayment temporarily. 

As soon as you start repaying your loan, and the payment becomes larger and larger the more money you will save in terms of interest. Paying back your payments helps to maintain your credit score rating stronger.

It's always to be well aware of all your student loan repayment options so that you can take control of your repayment phase.

What if I need to cancel my loan?

If you don’t want to enroll in school after you have been awarded a Perkins, or no longer you are in need of money. You can cancel the loan by contacting your school’s financial aid department. Your loan can be canceled even if part of the money has been disbursed, but there are deadlines for full or partial cancellation. Review your loan agreement carefully for the terms and conditions of cancellation.

But there is a certain exception in what the Perkins loan can be canceled:

  • If  borrower dies

  • If the borrower becomes completely disabled

  • If the program closes before the degree is completed

  • Incase borrower declares bankruptcy (This is extremely rare, but in some cases, a court can discharge student loan obligations if repayment would cause extreme hardship to the borrower.)

Working in specific professions or in high-risk areas may allow you to qualify for loan forgiveness. Now that the Federal Perkins Loans are not disbursed anymore, people who had taken the loan can apply for its cancellation. However, there are some eligibility criteria that requires to be fulfilled. It is advised to have detailed knowledge about Federal Perkins loan cancellation before proceeding with the application. Between 50% and 100% of a Perkins Loan can be forgiven if you work in one of these areas:

  • U.S. Armed Forces, serving in active duty in a dangerous location

  • Firefighters working full-time

  • Law enforcement or correctional officers working full-time

  • Teachers working full-time in high-need areas or in special education 

  • Nurses or medical technicians working full-time

  • Masters-prepared librarians working in high-need areas or public schools

  • Attorneys working in public defense or community service

  • Social workers working with the disabled or with children in low-income communities

  • Educators working full-time in a Head Start program

In order to qualify for loan forgiveness, you must commit to working profession for at least some period of time. The one who is eligible for Perkins loan is also eligible for loan forgiveness, regardless of when the loan was made, as long as the work was performed after 1998. 

If you want to apply for the loan forgiveness or cancellation you can contact the institution that is servicing your loan.

Perkins loan eligibility

To be eligible for a Perkins loan, students must demonstrate exceptional financial need.  In all forms of assistance, including scholarships and grants have been taken into consideration.

Worried about your college tuition? Find the best student loans for you.

Disability discharge

If you prove that you are permanently or totally disabled, your Perkins loan may be discharged.  If you are a U.S. veteran, documentation from the Department of Veterans Affairs can certify that you are unable to be employed due to a service-related disability. Proof of disability can also be in the form of a certification from the Social Security Administration, attesting that your next disability review will be between five and seven years from your most recent review, provided you are receiving benefits from Social Security Income or Social Security Disability Insurance.

Finally, a physician can certify your permanent disability, stating that significant productive activity would result in death and that the mental or physical disability has persisted for at least 60 months or can be expected to persist for at least 60 consecutive months.


Applicants must meet all eligibility requirements for the Perkins Loan this means they must be enrolled at least part-time at a school that takes part in the Perkins Loan Program, and they must demonstrate exceptional financial need. Provided all eligibility requirements are met, recipients are selected at the discretion of the school’s financial aid office. It’s worth your time to contact your school’s financial aid office with any specific questions regarding the selection process.

Repayment terms for Perkins Loans vary according to school. If you have trouble keeping up with your repayment schedule, contact the school where you received your Perkins Loans. They will be able to discuss your repayment options with you, including possible consolidation or alternative repayment plans.

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