While the federal Perkins student loan program is closed to new borrowers, former students who took out Perkins Loans during their time in school may be eligible for loan cancellation. Borrowers in the public sector have this option accessible to them. What you need to know about the Perkins loan forgiveness program if you're considering applying for it and have Perkins loans.
How Does Perkins Loan Forgiveness Work?
Undergraduate and graduate students who demonstrated financial need were eligible for Perkins loans with a reduced interest rate. Both undergraduates and postgraduates were eligible for loans of up to $32,500. The last payouts under the Perkins Loan program occurred on June 30, 2018, despite the program's official expiration date of September 30, 2017. 1
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Although no new Perkins Loans will be provided, borrowers who already hold such loans may be eligible for completely canceling their remaining balance under certain circumstances.
All qualified vocations are in the public service sector, but the amount forgiven and the pace at which it is canceled depend on the professional path you choose and the length of time you spend in that profession.
As a rule, debts are forgiven in stages spread over five years rather than entirely at once. For those who are qualified, below is the work schedule:
- 15% of the initial loan amount every year for the first two years.
- Twenty percent of the principal loan amount in years three and four.
- 30% of the loan's initial amount for the fifth year.
Don't worry about racking up a hefty tax bill in the year you earn forgiveness on your Perkins Loans because of this fact.
Who May Receive Perkins Loan Forgiveness?
Borrowers who have taken out Perkins Loans and are currently employed in one of the following public service sectors are eligible for loan cancellation:
- Teacher.
- Medical worker or nurse.
- Firefighter.
- Professional early interventionist.
- A member of the teaching staff of a tribal institution.
Guidelines For Requesting Cancellation of a Perkins Loan
If you are eligible for a Perkins Loan cancellation, you should contact the college that issued the loan or the student loan servicer that manages your loan account there. To cancel your student loans, you must complete the appropriate paperwork, which may be obtained from the school or loan servicer. 1 2
The application process requires you to present evidence that you worked in a qualified occupation during the period in question. It's important to remember that most types of Perkins Loan forgiveness need a full-time job, so if you've just been working part-time, you may not qualify.
What To Do If Perkins Loan Forgiveness Doesn't Apply
Perkins Loan cancellation is contingent upon meeting certain job conditions; you may still have options if you still need to achieve these criteria. To begin, consider how your professional choice can affect your eligibility for loan forgiveness.
It makes sense to retain your debt at its current level if, for instance, you have been working part-time in a qualified position and want to move to full-time to begin the clock on Perkins Loan forgiveness. The following alternatives should be considered if a Perkins Loan discharge is not possible:
Combine your loans
Neither Public Service Loan Forgiveness nor income-driven repayment programs apply to Perkins Loans. Both programs are open to some, but if you combine your debts through the Direct Consolidation Loan program, you will be eligible for both. Consolidation may be the answer if you want to save monthly money or are hoping to eventually qualify for PSLF.
Student loan refinancing
Consider refinancing your student loans if you're searching for strategies to lower your monthly payment. You can get an interest rate for a private loan lower than the typical 5 percent charged on Perkins Loans. Private refinancing lenders may also provide more adaptable repayment terms, anything from five to twenty-five years.
Alternate Strategies For Repaying Your Perkins Loan
You can consolidate your Perkins loan with other federal student loans through a refinancing or consolidation program. The United States government has consolidation choices. Loan consolidation may be an option if you have federal and private student loans from several lenders, such as banks or charities. You can consolidate your debt and reduce your monthly outlay, as well as your overall interest rate.
