What is a Federal Perkins Loan?
A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate and graduate students with financial need. Your school is your lender. The loan is made with government funds, and your school contributes a share. You must repay this loan to your school, not to us.

How much can I borrow?
Depending on when you apply, your level of need, and the school’s funding level, you can borrow up to

• $4,000 for each year of undergraduate study (the total amount you can borrow as an undergraduate is $20,000).
  
  
• $6,000 for each year of graduate or professional study (the total amount you can borrow as a graduate/professional student is $40,000, including any Federal Perkins Loans you borrowed as an undergraduate).

Other than interest, is there any charge to get these loans?
A fee is involved for Direct and FFEL Stafford Loans (click here for more information) but not for a Federal Perkins Loan. But, after you start to repay, if you skip a payment, make a payment late, or make less than a full payment, you might have to pay a late charge. If you continue not making payments as required, you will have to pay collection costs.

How will I be paid?
Your school will either pay you directly (usually by check) or credit your account. Generally, you’ll receive the loan in at least two payments during the academic year.

Can I cancel the loan if I change my mind, even if I’ve signed the promissory note agreeing to the loan’s terms?
Yes. Your school must notify you in writing whenever it credits your account with your Perkins Loan funds. You may cancel all or a portion of your loan if you inform your school within 14 days after the date your school sends you this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.) If you receive Perkins Loan funds directly by check, you may refuse the funds by returning the check to the school. How much will I have to repay each month?

When do I pay back this loan?
If you’re attending school at least half time, you have nine months after you graduate, leave school, or drop below half time status before you must begin repayment (those on active duty with the military might have longer than nine months). This period of time is called a grace period. If you’re attending less than half time, check with your financial aid administrator to determine your grace period. At the end of the grace period, you must begin repaying your loan. You may be allowed up to 10 years to repay. Military personnel called to active duty will have additional options to postpone repayment. The school that made the loan should be contacted for more information.

How much will I have to repay each month?
Your monthly payment amount will depend on the size of your debt and the length of your repayment period. The table below shows typical monthly payments and total interest charges for three different 5-percent loans over a 10-year period.

Are there any tax incentives available for paying back these loans?
Yes, there are tax incentives for certain higher education expenses, including a deduction for student loan interest for certain borrowers. This benefit applies to all loans used to pay for postsecondary education costs. The maximum deduction is $2,500 a year. IRS Publication 970, Tax Benefits for Higher Education, explains these credits and other tax benefits. You can find out more at www.irs.gov or by calling the IRS at 1-800-829-1040. TTY callers can call 1-800-829-4059.

Is it ever possible to postpone repayment of my Federal Perkins Loan?
Yes, under certain conditions, you can receive a “deferment” or “forbearance” on your loan, as long as the loan isn’t in default. During a deferment, you’re allowed to temporarily postpone payments, and no interest accrues (accumulates). Click here and look under “Perkins Loans” for the list of deferments available.

The school that made your loan must defer your Federal Perkins Loan(s) during periods where you perform a service that qualifies you for loan cancellation. (Click here for a list of service cancellations.)

Deferments are not automatic. You must apply for one through your school, generally by using a deferment request form your school can give you. You must file your deferment request on time or you’ll pay a late charge. For more details on deferments, contact your school’s financial aid office.

If you temporarily can’t meet your repayment schedule but aren’t eligible for a deferment, you can receive forbearance for a limited and specific period. During forbearance, your payments are postponed or reduced. Interest continues to accrue, however, and you’re responsible for paying it.

Forbearance is not automatic either. You may be granted forbearance in intervals of up to 12 months at a time for up to 3 years. You must apply for forbearance to the school that made your loan or to the agency the school employs to service your loan. You’ll have to provide documentation to show why you should be granted forbearance.

You must continue making scheduled payments until you’re notified that deferment or forbearance has been granted. Otherwise, you could become delinquent or go into default.

Is it ever possible to have my Federal Perkins Loan discharged (canceled)?
Yes. Federal Perkins Loans can be canceled if the borrower dies or becomes totally and permanently disabled, for example. A loan can also qualify for cancellation under certain other conditions, as long as you’re not in default. See below for the list of cancellation provisions. For more information, contact your financial aid office.

If you have any questions about the terms of your Federal Perkins Loan, check with the school that made you the loan. Only that school may grant deferment, forbearance, or cancellation, or make other decisions concerning your loan.

PERKINS DISCHARGE/CANCELLATION SUMMARY¹

Cancellation Conditions	Amount Forgiven
Borrower’s total and permanent disability ² or death	100%
Full-time teacher in a designated elementary or secondary school serving students from low-income families	Up to 100%
Full-time special education teacher (includes teaching children with disabilities in a public or other nonprofit elementary or secondary school)	Up to 100%
Full-time qualified professional provider of early intervention services for the disabled	Up to 100%
Full-time teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas	Up to 100%
Full-time employee of a public or nonprofit child- or family-services agency providing services to high-risk children and their families from low-income communities	Up to 100%
Full-time nurse or medical technician	Up to 100%
Full-time law enforcement or corrections officer	Up to 100%
Full-time staff member in the education component of a Head Start Program	Up to 100%
Vista or Peace Corps volunteer	Up to 70%
Service in the U.S. Armed Forces	Up to 50% in areas of hostilities or imminent danger
Bankruptcy (in rare cases—cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship)	100%
Closed school (before student could complete program of study)—applies to loans received on or after January 1, 1986	100%

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¹As of October 7, 1998, all Perkins Loan borrowers are eligible for all cancellation benefits regardless of when the loan was made or the terms of the borrower’s promissory note. However, this benefit is not retroactive to services performed before October 7, 1998.

²Beginning July 1, 2002, if you are determined to be totally and permanently disabled based on a physician’s certification, you’ll have your loan placed in a conditional discharge period for three years. During this time, you don’t have to pay principal or interest. If you continue to meet the total-and-permanent disability requirements during, and at the end of, the three-year conditional period, your loan will be canceled. If you don’t continue to meet the cancellation requirements, you must resume payment. Total and permanent disability is defined as the inability to work and earn money because of an injury or illness that is expected to continue indefinitely or to result in death. You can’t qualify based on a condition that existed before the loan was made, unless a doctor certifies that the condition has substantially deteriorated. For more information on qualifying for this discharge, review your promissory note and contact your loan holder.

Click here for detailed information on teaching service cancellation/deferment options.