What a Perkins Loan Is and Who Can Get One

A Perkins Loan is a federal student loan made directly by your school to undergraduate and graduate students who show financial need. The school itself lends you the money from a federal fund, rather than the Department of Education or a private lender. Perkins Loans stopped being issued after September 30, 2017, but millions of borrowers still carry them and need to understand how repayment works.

If you took out a Perkins Loan before that date, you are likely still paying it back or may be in a grace period. The loan terms — interest rate, repayment timeline, and forgiveness options — differ significantly from newer federal loans like Direct Loans, so it matters whether you know which type you hold.

You can learn about you have a Perkins Loan by logging into the National Student Loan Data System (NSLDS) at nslds.ed.gov using your Federal Student Aid (FSA) ID. Your loan servicer's name will also tell you: Perkins Loans are serviced by specific companies, most commonly Nelnet or Heartland ECSI, depending on which school issued yours.

Key Takeaways

  • Perkins Loans carry a fixed 5% interest rate and do not accrue interest while you are in school at least half-time, during your grace period, or during deferment or forbearance.
  • You have a nine-month grace period after you leave school before repayment begins, and you can choose a 10-year standard repayment plan or extend it up to 25 years.
  • Perkins Loans are not may be able to access for Public Service Loan Forgiveness, but some borrowers may may have access to for Perkins Loan cancellation if they work in teaching, nursing, military service, or other may have access to fields.
  • If your Perkins Loan was transferred to the Department of Education after the program ended, your repayment terms and forgiveness options may have changed.
  • You can find your Perkins Loan servicer and current balance through NSLDS or by contacting your school's financial aid office.

Interest Rates and How Interest Accrues on Perkins Loans

Perkins Loans carry a fixed 5% interest rate, which is lower than most federal student loans issued today. This rate does not change over the life of the loan. However, the key advantage is that interest does not accrue — meaning it does not build up — while you are in school, during your grace period, or during approved deferment or forbearance periods.

Once you enter repayment, interest accrues daily on your outstanding balance. If you make only minimum payments, a portion of each payment covers the accrued interest, and the rest reduces your principal. If you stop making payments, unpaid interest capitalizes — it gets added to your principal balance — and you then owe interest on that larger amount.

Because the interest rate is fixed and relatively low, Perkins Loans are generally less expensive than private student loans or Parent PLUS Loans. However, they are more expensive than subsidized Direct Loans, which also do not accrue interest while you are in school.

The Grace Period and When Repayment Begins

After you graduate, leave school, or drop below half-time enrollment, you enter a nine-month grace period. During this time, you do not have to make payments, and interest does not accrue. This gives you time to find employment and get your finances in order before repayment starts.

Your first payment is due nine months after you leave school. Your loan servicer will send you a repayment schedule showing your payment amount, due date, and the number of payments remaining. If you do not receive this information within a few weeks of your grace period ending, contact your servicer directly — they are required to notify you, but it is your responsibility to confirm you have the details.

If you return to school at least half-time after your grace period has started, you may be able to restart your grace period, depending on your servicer's rules. Contact your servicer to ask whether this option is available to you.

Repayment Plans for Perkins Loans

Perkins Loans offer fewer repayment plan options than Direct Loans. Your main choices are a 10-year standard repayment plan or an extended repayment plan that can stretch payments over up to 25 years. The standard plan has fixed payments and costs less in total interest. The extended plan lowers your monthly payment but increases the total interest you pay over time.

You cannot use income-driven repayment plans (like SAVE, PAYE, or IBR) with a Perkins Loan unless it has been consolidated into a Direct Consolidation Loan. Consolidation combines your Perkins Loan with other federal loans into a single Direct Loan, which then becomes may be able to access for income-driven plans. However, consolidation also means you lose some Perkins-specific benefits, including certain forgiveness options and the lower interest rate on any portion that was Perkins.

To change your repayment plan without consolidating, contact your servicer and ask about switching from standard to extended repayment. You can usually make this change once without penalty, though rules vary by servicer.

Perkins Loan Cancellation and Forgiveness Options

Perkins Loans are not may be able to access for Public Service Loan Forgiveness (PSLF), which forgives loans after 120 payments while working for a government or nonprofit employer. However, Perkins Loans have their own cancellation programs that may cover your debt if you work in certain fields.

You may have your Perkins Loan cancelled — meaning the remaining balance is forgiven — if you work as a teacher in a low-income school, a nurse or medical technician in certain settings, a member of the military, or in other public service roles. The amount cancelled and the length of service required depend on the specific program. For example, teachers in low-income schools can have up to 100% of their Perkins Loan cancelled after five years of service.

To find out whether you may have access to for cancellation, contact your loan servicer and ask which programs explore to your occupation. You will need to provide proof of employment, such as a letter from your employer or a copy of your employment contract. Cancellation is not automatic — you must request it and submit the required documentation.

What Happened to Perkins Loans After 2017

The Perkins Loan program ended on September 30, 2017, and schools stopped issuing new loans after that date. However, the Department of Education did not when ready take over servicing of existing loans. Instead, schools were given the option to continue servicing their own Perkins Loans or transfer them to the Department of Education.

Many schools chose to transfer their Perkins Loans to the Department of Education, which then assigned them to federal loan servicers. If your Perkins Loan was transferred, you may have received a notice from your school and a new servicer contact. Your repayment terms remain the same, but you now deal with a federal servicer rather than your school's financial aid office.

Some schools continue to service their own Perkins Loans. If this is the case with yours, you will make payments directly to your school or to a servicer acting on the school's behalf. Either way, your loan terms do not change — the 5% interest rate, grace period, and cancellation options remain the same.

Common Mistakes to Avoid With Perkins Loans

One frequent mistake is consolidating a Perkins Loan into a Direct Consolidation Loan without understanding the trade-offs. Consolidation makes you may be able to access for income-driven repayment plans, but it also disqualifies you from Perkins-specific cancellation programs. If you work in teaching, nursing, or military service, cancellation may save you more money than an income-driven plan would. Compare your options before consolidating.

Another mistake is missing your grace period important date. If you do not make your first payment when it is due, your loan goes into default, which damages your credit and can trigger wage garnishment or tax offset. If you are struggling to afford your payment, contact your servicer before the due date and ask about deferment, forbearance, or an extended repayment plan — these options are available even if you have already missed a payment, though acting early is better.

A third mistake is not tracking which servicer holds your loan. Perkins Loans have been transferred multiple times over the years, and borrowers sometimes send payments to the wrong place or miss notices because they do not know who currently services their loan. Check NSLDS or your school's financial aid office at least once a year to confirm your servicer's name and contact information.

Frequently Asked Questions

Can I pay off my Perkins Loan early without a penalty?

Yes. Perkins Loans have no prepayment penalty, so you can pay extra toward your principal at any time without owing a fee. Paying extra reduces the total interest you will owe over the life of the loan. Contact your servicer to confirm that extra payments are applied to principal rather than held as a credit toward future payments.

What happens to my Perkins Loan if I go back to school?

If you return to school at least half-time, your loan enters a deferment period and interest stops accruing. You do not have to make payments while you are enrolled. Once you leave school again, you enter a new grace period. Contact your servicer to notify them of your enrollment status so they can update your account.

Do Perkins Loans have a statute of limitations for collection?

Federal student loans, including Perkins Loans, do not have a statute of limitations. The government can collect on a defaulted Perkins Loan indefinitely through wage garnishment, tax offset, or other means. However, if you are in default, you can rehabilitate your loan by making nine on-time payments over ten months, which removes the default status and stops collection efforts.

How do I know if my Perkins Loan was transferred to the Department of Education?

Check NSLDS at nslds.ed.gov or contact your school's financial aid office. If your loan was transferred, your servicer will be a federal loan servicer like Nelnet, Heartland ECSI, or another company under contract with the Department of Education. Your school can also tell you whether they still service your loan or transferred it.

Can I use income-driven repayment with my Perkins Loan?

Not directly. Perkins Loans are not may be able to access for income-driven plans unless you consolidate them into a Direct Consolidation Loan. However, consolidation disqualifies you from Perkins-specific cancellation programs, so weigh the benefits of income-driven repayment against the loss of cancellation before you consolidate.