What Is a Perkins Loan? Eligible for Student Loan Forgiveness

President Biden plans to forgive $10,000 in student loan for eligible borrowers and $20,000 in student loan debt for borrowers with Pell grants. Perkins loans are still eligible for the lesser amount.

As the process continues, let’s clear up what a Perkins loan is and how to tell if you have one.

A Perkins loan is a type of federal student loan that students with exceptional financial needs may receive. Perkins loans are subsidized, meaning the federal government pays off the interest while you’re in school.

According to the Consumer Financial Protection Bureau (CFPB), borrowers “typically start paying back your loan nine months after you graduate or drop below half-time enrollment in school.” CFPB adds that Perkins loan repayment periods max out at 10 years. Perkins loans carry a fixed interest rate of 5 percent.

The government no longer gives out Perkins loans. The program ended on September 30, 2017. On that date, schools could no longer give out new Perkins loans to students. However, it started phasing out in 2015 and many students are still paying their loans back today.

The U.S. ceased the Perkins loan program because of budgetary restraints. Because Congress didn’t renew the program in time, it deteriorated and loan disbursements ultimately halted by June 30, 2018.

Student loan borrowers can find out which type of loan they have by visiting the U.S. Department of Education’s Federal Student Aid website.

When Perkins loans were still available, the government and schools that co-funded the loans prioritized individuals with exceptional financial need. Exceptional financial need is a subjective concept and depends largely on the demographic of specific schools.

For Perkins loans, undergraduate borrowers received up to $5,500 per year with a maximum total of $27,500. Graduate students were limited to $8,000 per year with a total limit of $60,000 (including existing undergraduate debt from a Perkins loan).

If you have a Perkins loan, you may be eligible for loan forgiveness of up to $10,000 under Biden’s new relief plan. However, there are also other cancellation programs. According to the Department of Education, teachers, early childhood education providers, family services workers, firefighters, law enforcement officers, librarians, nurses, and other public service workers are eligible for Perkins loan cancellation under certain terms.

Cancellation terms depend on your line of work, but most Perkins loan borrowers are eligible for up to 100 percent of their loan to be canceled for 5–7 years of eligible full-time service.

The Department of Education says, “Application for cancellation or discharge of a Perkins Loan must be made to the school that made the loan or to the school’s Perkins Loan servicer. The school or its servicer can provide forms and instructions specific to your type of cancellation or discharge.”