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.

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.
 
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 4/22/2021. 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 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.  If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. 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 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 1.22% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.37% APR (with autopay), variable rates from 1.12% 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 1.29% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 10.76% APR (with autopay), variable rates from 1.22% 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 4/1/2021. 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 Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 2.76% – 7.14% (2.76% – 7.14% APR). Fixed interest rates range from 3.01% – 7.50% (3.01% – 7.50% APR).

Graduate Rate Disclosure: Variable interest rates range from 2.19% – 6.73% (2.19% – 6.73% APR). Fixed interest rates range from 2.89% – 7.09% (2.89%-7.09% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.36% – 9.54% (1.36% – 8.82% APR). Fixed interest rates range from 4.13% – 9.84% (4.13% – 9.12% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.36% – 8.34% (1.36% – 8.04% APR). Fixed interest rates range from 4.03% – 8.64% (4.03% – 8.34% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 2.10% – 7.41% (2.10%-7.41% APR). Fixed interest rates range from 4.69% – 7.83% (4.69% – 7.83% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.45% – 9.60% (4.45% – 9.53% APR). Fixed interest rates range from 7.39% – 12.94% (7.38% – 12.81% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.55% – 7.05% (3.55% – 6.77% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.07% APR).

Variable Rate Disclosure: Variable Rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of March 1, 2021, the one-month LIBOR rate is 0.11%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%. 

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates require a 5-year repayment term, immediate repayment, a graduate degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.


7 Important Disclosures for Discover.

Discover Disclosures

  1. Aggregate loan limits apply.
  2. Get a cash reward on each new Discover undergraduate and graduate student loan when you earn at least a 3.0 GPA (or equivalent) in any academic period covered by the loan. Limitations Apply. Visit DiscoverStudentLoans.com/Reward for 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 a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including undergraduate, graduate, health professions, law and MBA 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 April 1, 2021. 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. Your APR will be determined after you apply. Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.
  4. Lowest APRs shown for Discover Private Consolidation Loans are available for the most creditworthy applicants who are approved and choose a shorter repayment term, and include a 0.25% interest rate reduction while enrolled in automatic payments. 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 April 1, 2021. 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. Your APR will be determined after you apply. Visit Discover.com/student-loans/consolidation.html for more information, including up-to-date interest rates and APRs.
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.