5 Years in a Profession Could Wipe Away Your Perkins Loans — Here’s How

Perkins Loan forgiveness

Imagine having as much as 50 to 100 percent of your student loans wiped away over the next four to five years. Up to $60,000 of debt would be — poof — gone, just like that.

With Federal Perkins Loan forgiveness, that’s possible — for borrowers who took out a Perkins Loan before the program expired on Sept. 30.

Here’s how the program works and why it might be a good fit for you.

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.
  • 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 percent, plus interest
2 15 percent, plus interest
3 20 percent, plus interest
4 20 percent, plus interest
5 30 percent, plus interest
Total 100 percent

Partial cancellation: One type of eligibility for Perkins Loan forgiveness cancels up to 70 percent of your loan amount, plus interest you accrue in qualifying years.

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

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 these jobs, 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.

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

A borrower working in a forgiveness-eligible profession will need to gain a year of professional experience before applying. Uniquely, 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:

  1. Campus Partners
  2. University Accounting Service
  3. ACS Education Services

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.

Take advantage of the Federal Perkins Loan cancellation program

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.

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