Whatever Happened to Federal Perkins Loans?
The Federal Perkins Loan program has ended, so there are no new Federal Perkins Loans, but many borrowers still have Federal Perkins Loans.
What Is a Federal Perkins Loan?
Federal Perkins loans are subsidized loans with a fixed 5% interest rate, a 9-month grace period and a 10-year repayment term.
Federal Perkins Loans were awarded by colleges from a revolving loan fund established with a federal capital contribution that matched capital contributions from the colleges. No new federal capital contributions have been made since FY2009.
Undergraduate and graduate students were eligible for Federal Perkins Loans, based on financial need. Undergraduate students were eligible for up to $5,500 per year with a $27,500 aggregate loan limit. Graduate students were eligible for up to $8,000 per year with a $60,000 aggregate loan limit, including any undergraduate Federal Perkins Loans. The average Federal Perkins Loan was about $2,000.
Loan Forgiveness for Federal Perkins Loans
Federal Perkins Loans are eligible are eligible for numerous loan forgiveness programs, including
- Early childhood education
- Employee at a child or family services agency
- Faculty member at a tribal college or university
- Law enforcement officer
- Librarian with master’s degree at a Title I school
- Military service
- Nurse or medical technician
- Professional provider of early intervention (disability) services
- Public defender
- Speech pathologist with master’s degree at a Title I school
- Teacher Loan Forgiveness
- Volunteer service (AmeriCorps VISTA or Peace Corps)
Loan forgiveness typically occurred over a 5-year period, with 15% being forgiven in the first year, 15% in the second year, 20% in the third year, 20% in the fourth year, and 30% in the fifth year.
When Did the Federal Perkins Loan Program End?
The Federal Perkins Loan program ended on September 30, 2017. Colleges were allowed to disburse loans made prior to that date through the end of the 2017-18 academic year (June 30, 2018). Since then, no new Federal Perkins Loans have been disbursed.
As of March 31, 2020, approximately 1.9 million borrowers have $5.6 billion in outstanding Federal Perkins Loans. The volume of outstanding Federal Perkins Loans will decrease as borrowers repay their loans, qualify for Perkins loan forgiveness or consolidate their loans. Federal Perkins Loans have a 10-year repayment term.
Most Federal Perkins Loans are held by the colleges, not the federal government. If a college assigns their Perkins loan portfolio to the federal government, the college will lose their share of the revolving loan fund that was used to fund Federal Perkins Loans.