A Comprehensive Review of the Perkins Loan Program [Forgiveness/Cancellation, Repayment, & Death]

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Looking to find out more about your Perkins Loan? Stop looking.

In this post, we’ll get a comprehensive look at the Perkins Loan program.

What is a Perkins Loan

The Federal Perkins Loan Program provides low-interest loans to undergraduate and graduate students who have exceptional financial need.

The interest rate on a Perkins Loan is 5%

Perkins loans are made by a school of higher-education directly to student loan borrowers after you submit a free application for federal student aid.

Even if you went to a private school, that doesn't make your Perkins Loan a private loan. It's a federal loan. That said, unless you default on a Perkins Loan, you won't deal with the U.S. Department of Education or it's loan servicers.

Unlike other federal loans, you won't work with the federal government and it's loan servicers to manage your payments. Instead, you'll work with your school to arrange repayment schedules and to request deferments or forbearances.

Perkins Loan Limits

Before it's death (more on that below) undergraduate students could borrow $5,500 per year with a cap of $27,500.

For professional students pursuing postsecondary education, the annual loan amount limit increases to $8 thousand with a cap of $60 thousand (including undergraduate loans).

Your actual annual loan amount is determined by a financial aid administrator at your school's financial aid office.

The amount you receive will be partly based on other federal student aid you may receive during the academic

The Perkins Loan Program is Dead

September 30, 2017, marks the death of the Perkins Loan program. Schools made final disbursements through June 30, 2018.

Perkins Loan Repayment Options

Perkins Loans don't have the same repayment options as other federal student loans like the FFEL and Direct Loan program.

They're not eligible for any of the income-driven repayment options.

So when you get your bill nine months after you drop below half-time enrollment, the minimum monthly payment you can get is $40.

Your loans will be in a nine-month grace period after you drop below half-time status.

Your repayment period is 10 years.

But, if need be, your school can extend the repayment term for up to 10 years if you qualify as a low-income individual.

Low-income individual is defined at 34 CFR § 674.33 (c)(2).

The good news is that you can consolidate your Perkins Loan into a Direct Consolidation Loan if you want to take advantage of the federal government's income-driven repayment options

Consolidation is also helpful if you're pursuing loan forgiveness under the Public Service Loan Forgiveness Program. The PSLF program only forgives Direct Loans.

Perkins Loan Cancellation for Teachers

The Perkins Loan Program was the first program to provide cancellation (i.e. loan forgiveness) for teachers.

To qualify, teachers have to work in low-income school districts (Title I schools).

More specifically, teachers have to work:

  • Full-time
  • in designated elementary or secondary schools
  • that serve students from low-income families.

You can also qualify if you're a full-time special education teacher. This includes if you teach children with disabilities in a public or nonprofit elementary or secondary school.

And if you're a full-time faculty member at a Tribal College or University, you can also qualify for loan cancellation.

Finally, you can qualify if you're a full-time teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas.

Perkins Loan Cancellation for Teachers covers teaching periods that started on or after August 14, 2008.

Related: Check if Your School or Educational Service Agency is a Title I School

Perkins Loan Cancellation vs. Teacher Loan Forgiveness vs. Public Service Loan Forgiveness

Trying to decide which forgiveness program is best for you?

Elsewhere, I’ve discussed both Teacher Loan Forgiveness and Public Service Loan Forgiveness so I won’t do that here.

Instead, let’s just answer the question:

Which is better: Perkins Loan Cancellation, Teacher Loan Forgiveness, or the PSLF program?

If you have graduate school debt or over $50 thousand in student loans, or both, I think PSLF is best for you. It offers the most loan forgiveness.

For many student loan borrowers, Perkins loans are the smallest amount of their loan debt. As such, Perkins loan cancellation doesn’t offer much help.

The same is true of Teacher Loan Forgiveness, which offers at most $17,500 in forgiveness.

Because of that, PSLF wins the battle between the forgiveness programs.

Other Perkins Loan Cancellation Opportunities

Aside from being a teacher, you can get your Perkins Loan canceled if you're a:

  • full-time qualified professional provider or early intervention service provider for the disabled;
  • full-time employee of a public or nonprofit child or family service agency providing services to high-risk children and their families from low-income communities;
  • full-time nurse or medical technician;
  • full-time law enforcement or corrections officer;
  • full-time staff member in the education component of Head Start;
  • full-time Vista or Peace Corps volunteer;
  • full-time active duty armed forces service member in a hostile fire or imminent danger pay area
  • full-time member in a pre-kindergarten or child-care program that's licensed or regulated by a state;
  • full-time firefighter for a local, state, or federal fire department;
  • full-time speech pathologist with a master's degree working in certain elementary or secondary schools;
  • full-time librarian working in certain schools or public library serving Title I schools; or
  • full-time attorney employed in public or community defender organization.

Eligible Even if Default

In general, to qualify for a Perkins Loan discharge, you must perform uninterrupted service for a specific length of time (usually 4 to 5 years).

You can still qualify to have your defaulted loan canceled so long as it has not been accelerated.

All is not lost if your loan has been accelerated.

You can still get your loan canceled for your service before the loan was accelerated.

How to Apply for Perkins Loan Cancellation

You apply for Perkins Loan cancellation by contacting the school holding your loans.

Unlike Teacher Loan Forgiveness, there's no one set form for Perkins Loan Cancellation.

How to Request Your Promissory Note

If you ever want to see your the Master Promissory Note for your Perkins Loan, you'll want to request it from your school.

There's no formal form to do so.

You can submit a written request or oral.

Contact your school for more information.

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