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How to apply for Perkins Loan forgiveness

Yahoo Personal Finance· Getty Images
5 min read

The Perkins Loan program provided many benefits to low-income borrowers. But the government ended this loan program, and no new loans have been issued since 2018.

However, the Federal Student Aid Data Center reported that some borrowers still have Perkins Loans. As of the end of the third quarter of 2023, approximately 1.2 million borrowers have outstanding Perkins student loans, owing a combined $3.7 billion.

If you have loans in repayment, you could qualify for Perkins Loan forgiveness due to your employment or volunteer service.

The Perkins Loan program was a federal student loan program designed to help low-income students pay for undergraduate degrees. Unlike other federal loans, all Perkins Loans were subsidized, meaning the government would pay the interest that accrued while the student borrower was in school.

The Perkins Loan program has been in operation since 1957. But the government decided to end the program in 2017, and the last Perkins Loans were issued in 2018.

Although the Perkins Loan program ended, borrowers with existing loans are still on the hook for their repayment. The debt is not eliminated or discharged just because Perkins Loans are no longer available.

Unlike other federal student loans, Perkins Loans have their own loan forgiveness program. Depending on your employment or volunteer service, you could qualify for forgiveness of

up to 100% of your outstanding loan balance.

There are two ways Perkins Loan borrowers can qualify for loan forgiveness:

Teachers who work full-time in public or nonprofit elementary or secondary schools may qualify for cancellation of up to 100% of their loans. To qualify for Perkins Loan forgiveness, teachers must meet one of the following criteria:

  • Work in a school that serves low-income households

  • Provide special education services

  • Teach math, science, a foreign language, bilingual education, or another high-need field as designated by your state

Whereas other types of loan forgiveness eliminate a lump sum of your debt at the end of the required service term, Perkins Loan forgiveness works differently; the government cancels a percentage of your debt for each year of qualifying service:

  • 15% canceled after the first year of service

  • 15% canceled after the second year of service

  • 20% canceled after the third year of service

  • 20% canceled after the fourth year of service

  • 30% canceled after the fifth year of service

Besides educators, other workers can qualify for loan forgiveness of their Perkins Loans based on their employment or volunteer work. The amount of forgiveness available and the service requirement varies by role:

The Perkins Loan program had a quirky structure; the loans could be serviced by colleges or outsourced to a third-party loan servicing company. The first step of the Perkins Loan forgiveness application process is to contact the school or loan servicer handling your loan.

The application process can vary by school or loan servicer, so they can tell you what steps you need to complete and which documents you need to submit for the appropriate type of loan forgiveness or discharge.

If you aren't eligible for Perkins Loan forgiveness, there may be other ways to get relief from your debt. These are three approaches Perkins Loan borrowers can take to manage their loans:

Borrowers earn loan forgiveness through their work. By contrast, loans can be discharged due to circumstances outside of your control, such as a major disability.

If you have Perkins Loans, the government will discharge up to 100% of your outstanding loans in the following instances:

  • If you declared bankruptcy and the court decided ordering you to repay the loan would cause you a significant undue hardship.

  • Your school closed before you graduated or completed your program of study.

  • You become totally and permanently disabled as certified by a medical professional, the Department of Veterans Affairs or the Social Security Administration.

  • The primary borrower passes away, so the responsibility of repaying the loan doesn't fall to the borrower's loved ones.

If you have Perkins Loans, you aren't eligible for most federal repayment plans or loan forgiveness programs. But there is a workaround; you can consolidate your debt with a Direct Consolidation Loan. After consolidating, your loans will be transferred to the Direct loan system, and you'll be eligible for other federal benefits.

If you have multiple federal loans, you can use a Direct Consolidation Loan to combine your loans into one. And you can have a repayment term as long as 30 years; with a longer repayment term, your payments could be reduced to a more manageable level.

You can apply for a Direct Consolidation Loan online.

An IDR plan recalculates your monthly payments based on your discretionary income: the difference between your earnings and the federal poverty guideline for your state and family size. Some borrowers qualify for payments as low as $0.

Perkins Loan borrowers aren't eligible for IDR plans unless they consolidate their loans with a Direct Consolidation Loan. After the loans are consolidated, borrowers can enroll in an IDR plan online.

Enroll in an IDR plan online or by contacting your loan servicer.