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The Federal Perkins Loan Program ended: What this means for you
How this need-based program worked, plus alternatives to consider.
The Perkins Loan Program was one of the best deals you could get on federal loans. While it stopped issuing new loans back in 2017, its repayment, forgiveness and discharge programs still run as usual. If you’re a new borrower who was hoping to take advantage of this now-defunct program, you might want to consider the federal Direct Loan Program instead.
What was the Federal Perkins Loan Program?
The Federal Perkins Loan Program offered needs-based student loans to both undergraduate and graduate students. Unlike other federal student loans, your school was the lender rather than the federal government.
It stood out thanks to its especially low interest rates and longer grace period than other federal loan programs. And Perkins Loan holders also qualified for special forgiveness programs that required a shorter service commitment than Public Service Loan Forgiveness.
How much could I borrow?
| Type of student | Annual limit | Lifetime limit |
|---|---|---|
| Undergraduate | $5,500 | $27,500 |
| Graduate | $8,000 | $60,000 |
How much you could borrow under the Federal Perkins Loan Program was determined by your school’s financial aid office, rather than the government. The average loan amount was around $2,000, according to US News & World Report.
How much did it cost?
- Interest rate: 5%
- Fees: None
- Loan term: Up to 10 years
The main cost of a Perkins Loan was interest, which was fixed at 5% without accumulating while you were in school or during your nine-month grace period. Unlike other federal loans, there were also no loan fees. However, the longest loan term was 10 years — significantly shorter than other repayment plans available to students.
Here’s what you might have expected to pay on a standard 10-year repayment plan according to those rates and terms:
| Loan amount | Monthly repayment | Total cost |
|---|---|---|
| $2,000 (average Perkins Loan) | $21.21 | $545.57 |
| $27,500 (undergrad limit) | $291.68 | $7,501.62 |
| $60,000 (graduate limit) | $636.39 | $16,367.17 |
Who was eligible?
You needed to meet the following criteria to qualify for a Perkins Loan:
- Exceptional financial need
- Undergraduate, graduate or professional student
- Enrolled at least half-time at a school participating in the Perkins Loan Program
Why did the Federal Perkins Loan Program end?
Schools lost their authority to disburse Federal Perkins Loans on September 30, 2017 when Congress chose not to renew the program. The Federal Perkins Loan Program had been originally set to expire in 2014, but received a one-year extension to 2015 and another two-year extension to 2017.
What does this mean for current Perkins Loan holders?
The only change this spells for current Perkins Loan holders is that they can’t take out a new loan through the program. Schools, servicers and the federal government continue to handle repayments as they had before.
Are Perkins Loans eligible for forgiveness?
Yes. Perkins Loans are eligible for total or partial forgiveness based on professional or volunteer work. Eligible lines of work include:
- Teacher
- Firefighter
- Public defender
- Law enforcement officer
- Nurse
- Medical technician
- Military service member
- Librarian
- Speech pathologist
- AmeriCorps volunteer
- VISTA volunteer
- Peace Corps volunteer
- Early intervention (disability) services provider
- Early childhood education provider
- Child or family services agency employee
- Tribal college or university faculty member
You can learn more about how these programs work and if you qualify by checking out our guide to student loan forgiveness programs.
Take a deeper dive into Federal Perkins Loan forgiveness
Can Perkins Loans be discharged?
Yes. Perkins Loans can be discharged under several circumstances, including:
- Bankruptcy
- Death
- School closure
- Total and permanent disability
- Military service-connected disability
Spouses of 9/11 victims are also eligible for discharge. Read our guide to learn more about how student loan discharge works for Perkins Loans.
Alternatives to Federal Perkins Loans
While the Federal Perkins Loan Program might no longer be accepting new applications, you can still apply for one of the following types of student aid:
- Direct Subsidized Loans. Available to undergraduate students, these need-based federal subsidized loans are the closest thing to Perkins Loans.
- Direct Unsubsidized Loans. These loans have the lowest federal rates available to both undergraduates and graduate students — regardless of need.
- Direct Grad PLUS Loans. Graduate students can apply for up to 100% of their school-certified cost of attendance.
- Direct Parent PLUS Loans. Parents can borrow up to 100% of their undergraduate child’s school-certified costs.
- Private student loans. When federal loans fall short, private lenders can offer up to 100% of school-certified costs and competitive rates and fees.
Compare private student loans
Bottom line
Perkins Loans were one of the most competitive federal student loan options out there. Though the program ended back in 2017, its repayment and forgiveness options remain unaffected.
If you need a new student loan, you might want to consider applying through the federal Direct Loan Program instead. Or check out other alternatives with our guide to student loans.
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