Perkins loans are federal student loans offered to undergraduate and graduate students with exceptional financial need. They are always subsidized, meaning you won’t pay or accrue any interest while you are in school or during the nine-month grace period following graduation. After that, your loans have a fixed interest rate of 5 percent and are typically repaid over a period of 10 years.
Perkins loans began as National Defense Student Loans (NDSLs) in the 1950s and were originally available only to financially needy students planning to study mathematics, engineering or a modern foreign language, or who wished to teach.
Today, Perkins loans are for higher amounts and have more favorable forgiveness requirements. They are available to all financially needy students and are not exclusively offered to students in certain areas of study.
Perkins Loan Forgiveness
Because Perkins loans are available only for the financially neediest students, these loans have the most opportunities for loan forgiveness. If you fit the criteria for loan forgiveness, all or part of your debt is cleared.
Your Perkins loans may be partially or completely forgiven if you go into one of the following lines of work:
- Volunteering, such as with the Peace Corps or AmeriCorps
- Teaching in a low-income area
- Legal work that serves the public
- Practicing medicine in an underserved area
Perkins Loan Limits
Students are only allowed to borrow a certain amount in Perkins loans per year. As an undergraduate student, you may not borrow more than $5,500 per year, for a total of $27,500. If you’re a graduate student, you cannot borrow more than $8,000 per year. You cannot borrow more than $60,000 in both undergraduate and graduate Perkins loans combined.
Perkins loans are backed with government money but are distributed by individual colleges and universities. Your maximum loan amount is dependent upon the availability of the loan at your school. This means that even if you are eligible for Perkins loans, there is no guarantee that you’ll be able to borrow the maximum amount each year.
Applying for a Perkins Loan
To apply for a Perkins loan, complete a Free Application for Federal Student Aid (FAFSA). By completing this application, you’ll also find out if you’re eligible for other types of federal financial aid such as Stafford loans.
If you’re not eligible for these loans or if they don’t cover all of your educational costs, you can also apply for PLUS loans or private education loans.