What Is the Federal Perkins Loan Program?

By Lora Keleher , last updated July 29, 2011

The Federal Perkins Loan Program provides educational funding for post-secondary education to individuals who come from economically disadvantaged backgrounds. In past years, the loan program used to be called the National Direct Student Loan and National Defense Student Loans. Perkins Loans give low-income students the opportunity to obtain a college or graduate-level education. These loans have a low five-percent interest rate, and repayment does not start until nine months after a student decreases to half-time enrollment, drops out, or graduates. Additionally, students who enter certain career paths after graduation are eligible for full or partial loan cancellation, known as loan forgiveness.


The US Department of Education determines Perkins Loan eligibility, based on standards developed by Congress. To qualify, students must attend one of the 18,000 participating educational institutions, as well as demonstrate the need for finances by providing accurate information on their Free Application for Federal Student Aid (FAFSA) application. Factors considered include a student’s income and assets, if independent, and his or her family’s income and assets, if the student is claimed as a dependent. When students are claimed as dependents, their family size, and the number of family members also pursuing higher education, are also determining factors. Another factor is whether or not the student has dependents. Students must reapply for eligibility every year, by submitting a new FAFSA application.

Loan Amounts

Undergraduate students are eligible for up to $4000 per year, while graduate students are eligible for up to $8,000 per year. Undergraduates cannot borrow more than $27,000 per year, including the Perkins Loan amount, and graduate students cannot borrow more than $60,000 per year, including the Perkins Loan amount. Loan payments are deposited into the students’ account, or made by check, and students typically receive two payments per year. The full amount of the loan, plus interest must typically be repaid within ten years. However, exceptions are sometimes granted to students who join the military.

Funding Sources

Perkins Loans are funded through FCC contributions and money contributed by the school. Money is also obtained through student loan payments made by previous recipients. In the event that a loan is forgiven, the government pays the loan amount to the school, and the school is required to reinvest that money into the Perkins Loan fund for future students.

Loan Forgiveness

Loans obtained through the Perkins Loans program are forgiven when students pursue certain career paths after graduation. In some cases, the entire loan amount is forgiven, while in other cases, a partial amount is forgiven. Students who graduate and go on to teach in low-income or non-profit elementary and secondary schools are typically eligible for full forgiveness, while teachers who teach at other educational institutions are generally eligible for partial loan forgiveness. Certain law enforcement personnel, students who enlist in the military, and lawyers who work on behalf of public interest are often granted full or partial loan forgiveness. Additionally students who participate in volunteer work by joining the Peace Corps or AmeriCorps, or students who conduct certain types of clinical research, or practice medicine in underserved communities are also eligible.

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