What is a Perkins Loan?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 28 September 2019
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A Perkins Loan is an education loan provided by the United States government on a need-based basis to students studying at any one of 1,800 eligible educational institutions. Perkins Loans are open to American citizens and non-residents alike, as long as they are enrolled at least half time in a participating institution and they demonstrate financial need. Like other government-based student loans, the Perkins Loan comes with very favorable repayment terms.

This government loan is named for Carl D. Perkins, a Kentucky Congressman who was noted for his efforts on behalf of disadvantaged Americans. The goal of the Perkins Loan program is to make education more accessible to people of low income.

Under the terms of a Perkins Loan, as long as a student is in school, the government pays the interest on the loan. Upon graduation, the student has a nine month grace period, and then a 10 year repayment period. Typically, lenders are willing to negotiate deferments for hardship as needed for borrowers.

Undergraduates can borrow up to $4,000 US Dollars (USD) each year in Perkins Loans, with a lifetime cap of $20,000 USD. Graduate students are eligible for slightly more, $6,000 USD each year and $40,000 USD, including undergraduate loans, over a lifetime. In both cases, the interest rate for the Perkins Loan is fixed at 5% for the lifetime of the loan.


Perkins Loans are also eligible under a variety of loan forgiveness programs. Students who agree to teach in at-need communities, for example, have a percentage of their Perkins Loans forgiven each year. Loan forgiveness is also available for people who participate in various service programs, or who provide medical services to communities in need. If someone becomes permanently disabled, his or her Perkins Loan will usually be canceled, but these loans are usually not eligible for cancellation after bankruptcy.

The favorable terms of Perkins Loans make them a very good choice for students who can get them. The Perkins Loan Program also recognizes specific issues which may affect certain borrowers, providing leniency in a variety of situations. For example, if someone is called to military service while the loan is in deferment, the loan will be held in that status for the duration of the deployment.

Students apply for Perkins Loan by filling out financial aid documentation for their college or university. Typically, the financial aid application consists of the Free Application for Federal Student Aid (FAFSA), although some schools may require supplementary documentation.



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