Perkins Loan Repayment: How to Repay These Federal Loans

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Perkins loans, a type of federal student loan based on extreme financial need, are no longer available. The program ended in September 2017, and federal law required colleges to disburse the last Perkins loans by July 2018. About 1,700 colleges participated in the program.

If you were an undergraduate or graduate who took out Perkins loans before they were discontinued, you’re still required to repay them. But because of low (and fixed) interest rates and lots of forgiveness options, there are many ways to make Perkins loans repayment more manageable.

Here’s what you need to know:

Basics of Perkins loan repayment

While the Perkins loan program — formerly known as national defense student loans or national direct student loans — has expired for new borrowers, anyone who took out these loans before it ended is still responsible for making payments. But the program was a relatively generous one, with many ways to ease the burden of loan bills. Here’s how Perkins loan repayment works:

  • The repayment term for Perkins loans is 10 years. The maximum loan amount was $5,500 a year for undergraduates and $8,000 a year for graduate students, though the amount you received was based on financial need and availability.
  • The grace period for borrowers who graduated, left school or dropped below half time was nine months, compared with six months for other types of federal student loans. That means you had more time to prepare for repayment and fit loan bills into your budget.
  • Perkins loans had no origination fees, unlike direct loans and PLUS loans from the federal government. The origination fee on other loan types generally comes out of the loan disbursement, meaning you see less money than you originally borrowed. Perkins loans let you keep the total principal balance without having to pay extra fees.
  • Interest rates are fixed, meaning they don’t change over time. They’re 5%, which is lower than some other federal loan types.
  • Payments may be made monthly or quarterly. There aren’t prepayment penalties for paying off your loan early.
  • While funding for Perkins loans comes from the government, your school or the school’s loan servicer collects student loan payments and helps you navigate repayment. That may make it easier for you to get help or communicate about your loans since you can call the school’s financial aid office for guidance.

Options for handling Perkins loan repayment

One of your main priorities is to make Perkins loan payments on time, every time, to protect your credit score. Missed or late payments will have a negative impact on your credit, which can prevent you from taking out other loans in the future at favorable rates. If you’d like to change your repayment plan or amount, check your options below.

OptionKey Fact
Change your repayment planNot all plans, such as income-driven repayment, are available to Perkins loan borrowers.
Delay your paymentThe government pays the interest charged during a qualifying deferment, so interest won’t accrue.
Pursue cancellationIf you work in a qualifying public service job, you could see up to 100% of your balance canceled.
Weigh consolidation and refinancingBefore you yield exclusive Perkins loans benefits by consolidating or refinancing, make sure you’re confident you won’t use them.

Change your repayment plan

As a federal Perkins loan borrower, you don’t have direct access to income-driven repayment plans if you need a lower monthly payment. You’ll need to speak with your school to learn about repayment options for Perkins loans.

But you can consolidate Perkins loans into a single direct consolidation loan to qualify for income-driven repayment if you need it. The catch is that you’ll give up unique Perkins loan benefits, such as loan cancellation for those in certain public service jobs (more on available cancellation programs later).

Double-check whether you’re better off keeping your Perkins loans as they are before consolidating them. If you qualify for Perkins loan cancellation, not consolidating Perkins loans may mean getting forgiveness on your loans within five years, even if you can’t get an income-driven payment in the meantime. For others who wouldn’t qualify for Perkins loans cancellation, consolidating to get a more flexible repayment schedule might be worth it.

Delay your payment

When you defer Perkins loans, you put payments on pause during a period when you’re unable to make them. You can defer Perkins loans for a number of reasons, including unemployment, economic hardship, cancer treatment and graduate fellowships. Contact your school’s financial aid office to discuss your options.

Interest won’t accrue during Perkins loan deferment. You may also receive a six-month post-deferment grace period, during which you’re not required to make payments.

Pursue cancellation

Perkins loans come with several cancellation options, particularly for borrowers who work in public service fields. Cancellation happens incrementally, in certain percentages each year of repayment. Borrowers in these professions — and more — can qualify for up to 100% loan cancellation within five years:

  • Teachers
  • Nurses or medical technicians
  • Firefighters
  • Speech pathologists with master’s degrees working at certain eligible schools
  • Librarians with master’s degrees working at certain eligible schools
  • Law enforcement or corrections officers
  • Public defenders

Other professions are eligible for reduced amount of loan cancellation, or cancellation after a longer period of time. If you don’t qualify, look into other loan forgiveness options, including the federal Public Service Loan Forgiveness program and loan repayment assistance from employers, states and other sources.

Your Perkins loan may also be discharged if you die, become totally and permanently disabled, declare bankruptcy or attend a school that closed. It’s also available for veterans with a service-connected disability and spouses of 9/11 attack victims.

Weigh consolidation and refinancing

Consolidating Perkins loans into a direct consolidation loan will mean giving up certain benefits, such as subsidized interest during loan deferment and access to Perkins loan cancellation. But if you need to switch to income-driven repayment, or if Public Service Loan Forgiveness is a better option for you than Perkins loan cancellation, consolidating might be best.

If your loans are in default — meaning you’re more than 270 days behind on payments — you can opt for rehabilitation through the federal government to bring them current again. You’ll make nine on-time payments within 10 months and — in return — the default will come off your credit report (though late payments will still appear). You can only rehabilitate your loans once.

For borrowers who aren’t having trouble affording their Perkins loans, private student loan refinancing is an option. If your credit score and income qualify you, a private lender may replace your Perkins loans with a private loan at a lower interest rate. Since Perkins loans already come with low rates and many borrower protections, the potential benefits of refinancing Perkins loans could be limited.

Perkins loan repayment FAQ

Do you have to pay back federal Perkins loans even though the program ended? Yes. Borrowers with existing Perkins loans must still repay them.

Repayment on Perkins loans begins when exactly? You must have started repaying Perkins loans nine months after graduating or leaving school.

What is the federal Perkins loan website? The federal government maintains a short webpage about Perkins loans, but your school’s financial aid website likely has more information.

Where can I find Perkins loan customer service? Contact your school’s financial aid office for questions relating to your Perkins loan.

Can Perkins loans be deferred? Yes, under several circumstances, including unemployment and financial hardship. Get in touch with your school to find out how to defer your Perkins loans.

Can Perkins loans be forgiven? Yes, if you meet certain requirements, such as working in an eligible field.

What will consolidating my Perkins loan do? Consolidating your Perkins loan into a direct consolidation loan will disqualify you from certain Perkins loan benefits, such as cancellation of your debt after five years of payments if you work in certain jobs. But you’ll gain access to other repayment programs, such as income-driven repayment. Refinancing Perkins loans into a private student loan will mean losing the ability to take advantage of any federal loan repayment benefits.

Andrew Pentis contributed to this report.

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1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  2. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 9/24/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for Discover.

Discover Disclosures

  1. Aggregate loan limits apply.
  2. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  3. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and Auto Debit Reward. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including undergraduate and graduate loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of October 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates.
  4. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for the Discover Private Consolidation Loan and include an Auto Debit Reward. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of October 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

4 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


5 Important Disclosures for SoFi.

sofiDisclosures

UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.26% annual percentage rate (“APR”) (with autopay), variable rates from 1.87% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.37% APR (with autopay), variable rates from 1.77% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.30% to 11.52% APR (with autopay), variable rates from 1.94% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 10.76% APR (with autopay), variable rates from 1.87% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 10/20/2020. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


6 Important Disclosures for Ascent.

Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Competitive variable rates calculated monthly at the time of loan approval based on a margin plus the 1-Month London Interbank Offered Rate (LIBOR) rounded to the nearest 1/100th of a percent. The current LIBOR is 0.152%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes. Rates are effective as of 10/01/2020 and reflect an Automatic Payment Discount. Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month.(See Automatic Payment Discount Terms & Conditions.)
    1. Undergraduate Loans: Your variable interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 2.69% and 12.98%. Fixed rate loans will not increase or decrease over the life of the loan and have an APR range between 3.53% and 14.50%. Rates reflect an Automatic Payment Discount of 0.25% on the lowest offered rate and a 2.00% discount on the highest offered rate. The following table shows a 48 month in-school period plus 9 months of grace prior to a full repayment term of either: 60-months (lowest fixed/variable rate), 144-months (highest fixed rate) or 180-months (highest variable rate) with examples of (i) Interest Only payments, (ii) $25 Minimum payments, and (iii) Deferred repayment options.(See Undergraduate Loan repayment examples.)
    2. Graduate Loans (Graduate, MBA & Law): Your variable interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 3.65% and 12.40%. Fixed rate loans will not increase or decrease over the life of the loan and have an APR range between 4.56% and 13.42%. Rates reflect an Automatic Payment Discount of 0.25%. The following table shows a 36 month in-school period plus 9 months of grace prior to a full repayment term of either: 84-months (lowest fixed/variable rate), 144-months (highest fixed rate), or 180-months (highest variable rate) with examples of (i) Interest Only payments, (ii) $25 Minimum payments, and (iii) Deferred repayment options. (See Graduate Loan repayment examples.)
    3. Medical: Your variable interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 3.67% and 12.42%. Fixed rate loans will not increase or decrease over the life of the loan and have an APR range between 4.57% and 13.44%. Rates reflect an Automatic Payment Discount of 0.25%. The following table shows a 48 month in-school period plus 36 months of grace prior to a full repayment term of either: 84-months (lowest fixed/variable rate), 144-months (highest fixed rate), or 240-months (highest variable rate) with examples of (i) Interest Only payments, (ii) $25 Minimum payments, and (iii) Deferred repayment options. (See Medical Loan repayment examples.)
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. (See Undergraduate Loan repayment examples.)
  4. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000.
  5. Interest rate reduction of either 0.25% (for Credit-Based Loans) or 2.00% (for Undergraduate Future Income-Based Loans) applies only when the borrower and/or cosigner sign up for automatic payments and the payment amount is successfully deducted from the designated bank account each month. The amount of the discount is dependent upon the loan product and credit history of the borrower at the time of application. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of in-school, deferment, grace or forbearance, unless a regular payment amount has been arranged with the servicer. If you have two (2) consecutive returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the interest rate reduction.(See Automatic Payment Discount Terms & Conditions.)
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions. Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation:
    • The student borrower has graduated from the degree program that the loan was used to fund.
    • The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate)
    • The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement.
    • Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicant’s ability to supply the necessary information for submission.


7 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 0.17% effective Sep 1, 2020 and may increase after consummation.


Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.