The Perkins Loan is a federal loan, meaning that the government subsidizes it. It was to help students under dire financial circumstances gain low-interest loans. The program ran from 1958 until 2017. Since then, no new Perkins loans have been distributed.
How Did the Perkins Loan Work?
Most federal loans have a designated loan servicer set by the government. The servicer will be the one responsible for accounting and enforcing payments. For Perkins loans, it is the school that acts as the servicer.
Borrowers have to work with either the school administration or a company set by the institution for repayment. Because of this most people with Perkins loans have an alternate servicer apart from their other federal loans.
Those interested in getting Perkins loans would have to complete a Federal Student Aid (FAFSA) form. They'd also follow the guidelines set by the institution they were attending. Loans were granted and adjusted depending on the student’s financial need and school’s funds. Undergraduates could borrow $5,500 per year of study while graduates had an $8,000 per year limit.
Due to budgetary concerns, the government decided to cut the Perkins loans program. It was met with some resistance as some members still wanted to have a streamlined student loan program in effect. The final fund disbursements continued until June 2018. Currently, all federal student loans are disbursed through the Direct Loan program.
Perkins Loan Repayment
While the Perkins program is no longer disbursing loans it’s possible that some borrowers still have Perkins loans that need to be repaid.
Repayment on Perkins loans typically begins nine months after graduation or when a student drops below half-time enrollment. Typically, these loans have a 10-year repayment term meaning the loan balances will be amortized over a 10 years based on the outstanding balance.
While there are typically no fees associated with Perkins loan, one could still incur penalties if they miss a payment. The school could charge a late fee or other charges depending on mandates.
Perkins Loans Today
The reason people still hear about Perkins Loans is due to some borrowers still completing payments. Many unpaid loans make up the recorded $1 trillion in student debt across America.
One option for borrowers is to enter public service work. There is a possibility to cancel the loan depending on what requirements the lender or government sets. Others have taken the route of loan consolidation to combine all their debt into a single repayment plan.
To get more information about loan forgiveness, borrowers have to check online. The rate varies depending on the job and how long the borrower has served in it. For example, special education teachers can qualify for 100% forgiveness.