What Is a Perkins Loan?

This federal student loan has been discontinued, but there are still implications—as well as other opportunities—for borrowers.

Written by Devon Delfino / February 10, 2022
Reviewed by Mark Kantrowitz

Quick Bites

  • The Federal Perkins Loan was a low-interest federal loan designed to help high-need students pay for college, but it’s not available anymore.
  • There are 1.5 million borrowers with Perkins loans, and $4.4 billion in outstanding loans.
  • You can apply for current federal student loans by completing the Free Application for Federal Student Aid (FAFSA) form.
  • If you have a Federal Perkins Loan, you’ll need to contact your school to start making payments when your grace period ends.

The Federal Perkins Loan was a low-interest federal loan meant to help students who had exceptional financial need.[1] Qualified borrowers could take out up to $5,500 per year (undergrads) or $8,000 per year (graduate students).[2] It was also a subsidized loan, so the government paid the interest while students weren’t required to make payments.[3]

After being in effect for decades, the Federal Perkins Loan Program was not renewed by the federal government and officially came to an end in September 2017, with final loan disbursements completed by June 2018. So if you’re applying for financial aid now, you won’t see that option listed in your financial aid package.

“The Federal Perkins Loan was a good program. However, it did vary from school to school,” says Jevita Rogers, senior executive director of financial aid, student employment and scholarships at the University of Colorado at Colorado Springs. “The interest rate was fixed at 5%, so during these last few years when interest was low, it was a higher interest rate for a lower-income student.”

If you’re worried about your borrowing options, there are other federal loans available. That includes options that are subsidized, like the Federal Perkins Loan was.

Inside this article

  1. If you have a Perkins Loan
  2. Available federal loans
  3. How to qualify

What to do if you have a Perkins Loan

There are still folks out there who have Perkins Loans. In fact 1.5 million of them are still paying a total of $4.4 billion back.[4]

If you have a Federal Perkins Loan, you’ll need to make those monthly payments until it’s paid off. If you aren’t sure how to do that, contact your school’s financial aid office.[1] They may have transferred the loan to another servicer, in which case you’ll have to contact them to make payments.

What federal loans are available for borrowers now?

Here are the federal loans currently available to borrowers[5, 6, 7]:

Direct Subsidized Loans

Who can borrow: Undergrads who have a demonstrated financial need, meaning your expected family contribution has to be less than the cost of attendance.

Interest rate: 3.73%

Important to know: You don’t have to worry about interest building up while you’re enrolled in school at least half-time, during the grace period or if you defer payments.

Direct Unsubsidized Loans

Who can borrow: Both undergraduate and graduate students. Unlike subsidized loans, there’s no need to show financial need.

Interest rate: 3.73% for undergrads and 5.28% for graduate students

Important to know: Interest will start accumulating as soon as you take out the loan.

Direct PLUS Loans

Who can borrow: Graduate students and parents of dependent undergrads. Financial need isn’t a factor here.

Interest rate: 6.28%

Important to know: Unlike other federal loans, a credit check is required.

Tip: If you already have federal loans, there’s also a Direct Consolidation Loan. That lets you combine your various federal loans into one loan, with one servicer.[8]

There are limits to how much you can borrow with federal loans. That depends on several factors, like:

  • If you’re an independent or dependent student

  • If you’re a graduate student or undergraduate

  • What year of school you’re completing

For example, Direct Subsidized and Unsubsidized Loans can max out at $5,500 to $12,500 per year. But Parent PLUS Loans can go up to the annual college costs after other aid options have been factored in.

Another key thing to understand is that federal loans come with borrower protections you probably won’t find with private loans.

“The federal loans will always be the best first choice for students due to the reduced interest rates, as well as the flexible repayment options and the ability to defer or postpone payments as situations arise,” says Rogers.

How to qualify for federal student loans

Unlike private student loans, you don’t have to worry about having a good credit score or a cosigner to qualify for most federal student loans. Instead, you have to complete the Free Application for Federal Student Aid (FAFSA).[9]

Tip: The FAFSA opens on Oct. 1 for the following academic year, so you can fill it out well ahead of the start of school.[9]

In general, your FAFSA needs to show that you meet these requirements to take out federal loans[10]:

  • Show an active enrollment status

  • Not be in default on another federal student loan

  • Have a high school diploma or General Educational Development (GED) certificate

If you qualify, the schools you’re accepted to will send you a financial aid award package that includes federal loans. From there, you can accept those loans for the full amount, or less, or skip them if you don’t need them.

Article Sources
  1. “Perkins Loans,” Office of Federal Student Aid, https://studentaid.gov/understand-aid/types/loans/perkins.
  2. “Federal Perkins Loans,” Caltech, https://www.finaid.caltech.edu/typesofaid/loans/perkins.
  3. “Federal Perkins Loans,” CUNY, https://www.cuny.edu/financial-aid/student-loans/federal-perkins-loans.
  4. “A Look at the Shocking Student Loan Debt Statistics for 2022,” Student Loan Hero, https://studentloanhero.com/student-loan-debt-statistics.
  5. “Subsidized and Unsubsidized Loans,” Office of Federal Student Aid, https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized.
  6. “Federal Interest Rates and Fees,” Office of Federal Student Aid, https://studentaid.gov/understand-aid/types/loans/interest-rates.
  7. “Loans,” Office of Federal Student Aid, https://studentaid.gov/understand-aid/types/loans.
  8. Rebecca Safier, “How to Decide If Direct Loan Consolidation Is Right for You,” Student Loan Hero, April 6, 2020, https://studentloanhero.com/featured/direct-loan-consolidation-right-choice.
  9. “What are the deadlines for filling out the FAFSA form?” Office of Federal Student Aid, https://studentaid.gov/2122/help/deadlines.
  10. “Eligibility Requirements,” Office of Federal Student Aid, https://studentaid.gov/understand-aid/eligibility/requirements.

About the Authors

Devon Delfino

Devon Delfino

Devon Delfino is a writer who’s covered personal finance—including everything from student loans to budgeting to saving for retirement and beyond—for the past six years. Her financial reporting has appeared in publications like the L.A. Times, U.S. News and World Report, Teen Vogue, Masha

Full bio
Mark Kantrowitz

Mark Kantrowitz

Mark Kantrowitz is a nationally-recognized expert on student financial aid, the FAFSA, scholarships, 529 plans and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make smarter, more informed decisions.

Full bio

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