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:
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.
Image credit: DisabilityDischarge.com
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.
Interested in refinancing student loans?
Here are the top 6 lenders of 2019!| Lender | Variable APR | Eligible Degrees | |
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| Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures
2 Important Disclosures for Earnest. Earnest DisclosuresTo qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application. Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of March 18, 2019, and are subject to change based on market conditions and borrower eligibility. Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance. The information provided on this page is updated as of 0318/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on ourstudent loan refinance product. © 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America. 3 Important Disclosures for Laurel Road. Laurel Road DisclosuresFIXED APR However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account. VARIABLE APR However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account. 4 Important Disclosures for LendKey. LendKey DisclosuresRefinancing 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. 5 Important Disclosures for CommonBond. CommonBond DisclosuresOffered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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 2.5% effective February 10, 2019. 6 Important Disclosures for Citizens Bank. Citizens Bank Disclosures
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 | 2.54% – 7.12%3 | Undergrad & Graduate | |
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