If you are struggling to pay your student loans or you are in default with your student loans, you may want to check the National Student Loan Database to see what type of loans you have. If you were the recipient of a Perkins loan before the program expired on September 30, 2017, there is a good chance that you could have your entire loan forgiven, canceled, or discharged.
In this guide, you will learn everything that you need to know about Perkins student loan forgiveness. This includes how a Perkins loan works, what professions qualify for forgiveness, how to apply for Perkins loan forgiveness, the repayment options, and the understanding of the difference between Stafford and Perkins loans.
What is a Perkins loan and how does it work?
Although the Perkins loan program no longer exists, it was an option for financially needy students to receive an affordable education. The Federal Perkins loan program provided students with low fixed interest rates and acceptable repayment terms to cover the cost of education-related expenses, such as tuition and housing.
If you were one of the few qualified students that were approved for the Perkins loan program, your school was the lender for your loans. The school matched the percentage of funds that were allocated to them by the federal government and determined who received the loans and how much you were offered for the loans. The funds awarded from the Perkins loan program are applied to academic expenses and the remainder of the fees would be issued to you in a refund.
Is a Perkins loan the same as a Stafford loan, if not what’s the difference?
While Perkins loans and Stafford loans both provide options for undergraduate, graduate and professional students to attend school there are key differences between the two. So it is easy to confuse the two loan options.
Here are the differences between a Stafford Loan and a Perkins loan:
- Stafford loans are managed by private lenders; Perkins loans are managed by the school you attend.
- Perkins loans defer their fixed interest rates until you are in repayment status. Stafford loans have a higher interest rate and are either subsidized or unsubsidized. Subsidized Stafford loans have deferred interest accrual until repayment, and unsubsidized loans accrue interest while you are still in school.
- Stafford loans are placed in repayment status within 6 months of you graduating or not maintaining at least half-time status. Perkins loans wait 9 months.
- Stafford loans are guaranteed against default by the federal government. Perkins loans receiving funding from the federal government, however, they are not backed by the federal government.
How does repayment work, and what are repayment options for Perkins loans?
Repayment for a Perkins loan begins within 9 months of graduating or dropping below half-time status. Repayment is made directly to the school that managed your Perkins loan. There are several repayment options available including deferment or forbearance for those who are unable to pay the monthly payment amount. The minimum monthly payment rates for Perkins loans are $30 for loans before October 1, 1992, and $40 for loans obtained after that date.
If your Perkins loans go into default you can rehabilitate these loans by making 9 monthly on-time payments. One thing to keep in mind is that you can look into having your loans canceled, discharged, or forgiven if you qualify.
Perkins loan forgiveness
Perkins loan forgiveness is not something that happens immediately. You can receive full cancellation or partial cancellation of your Perkins loan depending on your public service job and your years of service in that job.
Heres how it works:
- Full cancellation– total amount forgiven is up to 100% of the original principal loan balance within 5 years
- Years 1-2: 15% of the loan balance is forgiven including interest
- Years 3-4: 20% of the loan balance is forgiven including interest
- Year 5: 30% of the loan balance is forgiven including interest
- Partial cancellation– total amount forgiven is up to 70% of the original principal loan balance within 4 years.
- Years 1-2: 15% of the loan balance is forgiven including interest
- Years 3-4; 20% of the loan balance is forgiven including interest.
Qualifying for Perkins loan forgiveness
Certain public service professions can qualify for forgiveness of their entire Perkins student loans within five years, as long as they are employed full-time in these roles. The public service jobs that qualify for Perkins loan forgiveness through public service include the following:
- Teachers- this includes special education teachers, librarians, and school counselors.
- A nurse or medical technician
- A faculty member at a tribal college
- Cop, Police officer, Law enforcement officer
- Firefighter
- Military service
- Public defender
- A speech pathologist must have a master’s degree at Title 1 school
- Volunteer service with Americorps Vista or Peace Corps
- Early childhood education provider
- An employee of a child or family service agency
Other ways to receive loan forgiveness
Aside from Public Service Loan Forgiveness and Teacher Loan Forgiveness, there are other ways to have your Perkins loans eliminated. This includes the following:
- Bankruptcy
- School Closure
- Total and permanent disability
- Veterans disability
- Spouse of a victim of 9/11
How do you apply for Perkins loan forgiveness?
To receive forgiveness for your Perkins loans, you would need to contact your school and request an application for forgiveness. Perkins loan forgiveness is something that you need to apply for on an annual basis and you need to continue to make payments on your Perkins loan until your application has been approved.
Other things that you need to keep in mind include:
- You are required to show proof or documentation that you were/are working in a qualifying public service job for the period that you are requesting forgiveness.
- Receiving forgiveness for Perkins loans is not automatic, you need to apply for cancellation of the loans.
- Not all Perkins loans are eligible for forgiveness depending on your job. Professions that were added to the list of eligible professions in August of 2008 are not counted towards eligible work experience if it were performed before August 2008.
- Some public service jobs may have additional requirements.
- You do not need to be licensed or certified to receive forgiveness.
Conclusion
The information provided in this guide applies only to Federal Perkins loans. If you received other types of student loans Direct Loans or FFEL loans, then you would need to look into other repayment options. If you have any questions about repayment options for other student loans, or you still have questions about your Perkins loan forgiveness, feel free to contact our office to speak with a student loan advisor to help you
