What Is the Federal Perkins Loan Program?

The Federal Perkins Loan Program was a government-backed student loan initiative designed to assist undergraduate and graduate students demonstrating exceptional financial need. Established to provide low-interest loans, this program aimed to make higher education more accessible for eligible students. While it served as a significant source of aid for many years, the program has since been discontinued.

Perkins Loan Eligibility

To qualify for a Federal Perkins Loan, students needed to meet specific criteria. Exceptional financial need, determined through the Free Application for Federal Student Aid (FAFSA) and the Expected Family Contribution (EFC), was required.

Students also had to be enrolled at least half-time at a participating institution. General federal student aid eligibility requirements applied, such as U.S. citizenship or eligible non-citizen status and satisfactory academic progress. Schools played a significant role in determining recipients, often prioritizing students with the greatest need.

Perkins Loan Terms and Repayment

Perkins Loans carried specific financial characteristics and repayment obligations. They featured a fixed 5% interest rate. Interest was subsidized, not accruing while students were enrolled at least half-time or during approved deferment periods.

A standard 9-month grace period was provided after a student graduated, left school, or dropped below half-time enrollment before repayment was required to begin. Unlike other federal loans, the school that disbursed the Perkins Loan was also the lender and responsible for its collection. Repayment typically occurred over 10 years.

Borrowers had access to options such as deferment and forbearance, which could temporarily postpone payments under certain conditions like unemployment or continued enrollment. Portions or the entirety of a Perkins Loan could be canceled or discharged. This was possible for individuals working in specific public service professions, such as teaching, nursing, or law enforcement, or under circumstances like permanent disability, school closure, or bankruptcy where repayment would cause undue hardship.

Program Discontinuation

The Federal Perkins Loan Program concluded, with the authority for schools to make new loans ending on September 30, 2017. Final disbursements for existing loans were permitted through June 30, 2018. This discontinuation occurred because the program was not renewed by Congress.

For individuals who previously received a Perkins Loan, the obligation to repay these loans remains. Repayment continues according to the original terms, with the school or its designated loan servicer managing the collection process.

Students currently seeking financial assistance for higher education should explore other available federal student aid programs. These include Direct Subsidized and Unsubsidized Loans, which serve as primary federal loan options for students today.