Perkins Loan Forgiveness Could Wipe Away Some (or All) of Your Debt

 May 20, 2020
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Perkins Loan forgiveness
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Imagine having some — or even all — of your student loans wiped away over the next four to five years. With Federal Perkins Loan forgiveness, it’s possible.

If you have a Perkins Loan from before the program expired on Sept. 30, 2017, then you may be able to access this opportunity and have your balance forgiven over a period of five years, or get partial forgiveness in even less time. Here are the details:

Perkins Loan forgiveness occurs over time

The Federal Perkins Loan cancellation program is not a fit for everyone because not all Perkins Loans are eligible for forgiveness. Even if you do meet all of the eligibility requirements, cancellation isn’t automatic.

Here are four facts to keep in mind:

  • You must have taken out a loan before the program expired on Sept. 30, 2017.
  • You must request forgiveness from your school or your school’s servicer.
  • Your loan can’t be canceled the same year it was disbursed.
  • You must continue to make loan payments until your request has been processed.

Another important note: Perkins Loan forgiveness is applied for on an annual basis and awarded in increments over four or five years. The path to full and partial cancellation is gradual.

Full cancellation: Under many cases, your original principal loan balance will be forgiven according to the following schedule. Note that for each year you qualify for forgiveness, any interest you accrued during that year will also be forgiven.

Year Forgiveness
1 15%, plus interest
2 15%, plus interest
3 20%, plus interest
4 20%, plus interest
5 30%, plus interest
Total 100%

Partial cancellation: One type of eligibility for Perkins Loan forgiveness cancels up to 70% of the loan amount for AmeriCorps VISTA or Peace Corp volunteers.

Year Forgiveness
1 15%, plus interest
2 15%, plus interest
3 20%, plus interest
4 20%, plus interest
Total 70%

On the plus side, you can apply for pre-cancellation deferment if you’re not yet eligible but soon will be. This is helpful for new graduates who are short of 12 months of experience in an eligible profession. It keeps them from making payments on their Perkins Loans until they can start claiming forgiveness.

Perkins Loan forgiveness is a match for certain jobs and circumstances

Perkins Loan forgiveness is awarded to borrowers for one of two reasons: Their professional calling entitles them to cancellation, or other special circumstances are at work.

The following 13 vocations are eligible for loan cancellation.

  • VISTA or Peace Corps volunteer: up to 70%
  • Firefighter: up to 100%
  • Law enforcement or corrections officer: up to 100%
  • Nurse or medical technician: up to 100%
  • Librarian with a Master’s degree in a Title I school or public library serving Title I schools: up to 100%
  • Attorney in a federal public or community defender organization: up to 100%
  • Employee of a nonprofit child- or family-services agency: up to 100%
  • Employee in a Head Start educational program: up to 100%
  • Staff member in a state-regulated child care program: up to 100%
  • Provider of early intervention services for people with disabilities: up to 100%
  • Special education teacher in a public school or educational service agency: up to 100%
  • Full-time teacher in certain subjects in a teacher shortage area or educational service agency serving low-income students: up to 100%
  • Faculty member at a tribal college or university: up to 100%

A borrower working in a forgiveness-eligible profession will need to gain a year of professional experience before applying. A teacher would need to complete one academic year before filling out cancellation forms.

Certain professions, such as firefighter and librarian, were added to this list in August 2008. But your pre-2008 work experience in the field won’t make you eligible for the Federal Perkins Loan cancellation program.

Depending on your job, there might be more requirements. For example, teachers might need to teach a certain academic subject to be eligible.

There are other scenarios in which you could become eligible for Perkins Loans cancellation:

  • Permanent disability or death of the borrower
  • Bankruptcy, if you can prove undue hardship
  • School closing before you completed your program
  • Service in armed forces in a hostile fire or imminent danger area

For any of these scenarios, you’ll need to include supporting documentation. In the case of a borrower’s death, for example, a relative would need to send along a copy of a death certificate to finalize loan forgiveness.

No matter the reason you’re applying for Perkins Loan cancellation, it’s wise to check in with your school or your school’s loan servicer periodically. Then you can ensure that any changes in your situation or profession don’t affect your eligibility.

A teacher who is transitioning from leading math classes to history classes, for example, might find themselves no longer eligible for this program.

Eligibility can also be lost if you refinance or consolidate your Perkins Loans, so be careful when considering these options. Even a lower interest rate from refinancing could pale in comparison to the benefits of the Federal Perkins Loan cancellation program.

How to apply for Perkins Loan forgiveness

If you default on your Perkins Loan because you neglected to turn in your loan cancellation request on time, you could still have it canceled.

To file your forms on time, keep the lines of communication open with your school or your school’s loan servicer. Not sure where to start? Ask your school’s financial aid office.

In many cases, the school handles its applications on campus.

If your school outsources its loans to a servicer, you’ll need to track it down. The look of each servicer’s one-page application form varies, but they ask for the same basic information.

Here are three examples of Federal Perkins Loan cancellation forms:

You could also be directed to a loan servicer that allows you to search for your particular school’s forms.

Regardless of where you apply, make sure to select the form that relates to your specific profession. Generally, you’ll need to include proof that you’re licensed or certified to work in your field. You’ll also need the signature of your employer.

There will also be forms specific to personal situations, such as attending a school that closed before you had the opportunity to graduate.

In the unfortunate event that you need to apply for loan forgiveness due to disability, you can complete your application at DisabilityDischarge.com.

The website, run by Nelnet via the Federal Student Aid office, directs you to print and mail your form, along with supporting documentation from your physician or a government agency to the Department of Education.

Federal Student Aid

Why the Federal Perkins Loan cancellation program may be worth it

Maybe you’re not thrilled about working in a forgiveness-eligible profession right out of college. But don’t rule it out.

Think of the benefits of sticking with that job. You can gain valuable experience toward your next job while also working toward loan forgiveness, one year at a time.

A teacher or librarian who has their eyes fixed on working at a prestigious private school, for example, might be better served by starting out at a public school in a low-income neighborhood.

Whether you’re a potential fit for Perkins Loan forgiveness, see if you’re eligible for other forms of relief, including other student loan forgiveness programs.

Christina Majaski contributed to this report.

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1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.


2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Interest Rate Disclosure

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.48% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.

Auto Pay Discount Disclosure

You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

Student Loan Refinancing Loan Cost Examples

These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.

One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.

© 2021 Earnest LLC. All rights reserved.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
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Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

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Interest Rate: A simple annual rate that is applied to an unpaid balance.

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KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of April 29, 2021. Information and rates are subject to change without notice.
 


5 Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates from 2.49% APR to 6.94% APR (with autopay). Variable rates from 1.99% APR to 6.59% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.


6 Important Disclosures for Navient.

Navient Disclosures

1. NaviRefi loans are made by Earnest Operations LLC, a member of the Navient family of companies, subject to individual approval and underwriting criteria. California residents only: Loans made or arranged pursuant to a California Finance Lenders Law license. Additional terms and conditions apply.

– To qualify, you must be a U.S. citizen or non-citizen permanent resident of the United States, reside in a state we lend in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.navirefi.com/help-and-questions. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Loan terms are subject to eligibility. Approval and interest rate depend on the review of a complete application. Loan approval is subject to confirmation that your debt-to-income, free cash flow, credit history and application information meet the minimum requirements. You must have a minimum FICO score to be considered.

– You can choose between fixed and variable rates. Fixed interest rates are 2.75% – 6.04% APR (2.50% – 5.79% APR with Auto Pay discount). Starting variable interest rates are 2.13% – 5.89% APR (1.88% – 5.64% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.

– You can take advantage of the 0.25% Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. NaviRefi rate ranges are current as of June 1, 2021 and are subject to change based on market conditions and borrower eligibility.

– Loan cost examples: These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,250. Your actual repayment terms may vary.

– The information provided on this page is updated as of 06/1/2021. Earnest Operations LLC reserves the right to modify or discontinue (in whole or in part) this loan program and its associated services and benefits at any time without notice. Check www.navirefi.com for the most up-to-date information. Terms and Conditions apply. Call 855-284-4893 for more information on our student loan refinance product.

– Earnest Operations LLC – NMLS #1204917, CA CFL #6054788 – 535 Mission St., Suite 1663, San Francisco, CA 94105.
Navient Solutions, LLC – NMLS #212430 – 123 Justison St., Wilmington, DE 19801. Visit https://navirefi.com/lending-licenses for a full list of licensed states.


7 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.


8 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.