Got Perkins Loans? Here’s How 5 Years in Public Service Could Wipe Them Out

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The Perkins loan program may be history, but that doesn’t stop it from haunting your present.

Perkins loans were student loans designed for undergraduate and graduate students who showed exceptional financial need — the loans charged 5% interest, and you had 10 years to pay them off. 

The program ended on Sept. 30, 2017, but you’re still on the hook for paying off any of the Perkins loans you took out. 

But if you’re working in public service, you could potentially have your Perkins loans canceled

Like other student loan forgiveness programs, obtaining Perkins loan forgiveness is not an easy or quick process.

But if it could mean the difference between paying back thousands of dollars in student debt, it could be worth your effort.

How to Find Out If You’re Eligible for Perkins Loan Forgiveness

To be eligible for Perkins loan cancellation, you must be working full time in a qualifying public service role (we’ll explain the discharge option a little later) and your loans cannot be in default.

To default on federal loan repayment means you’ve failed to make your monthly payment for 270 days (nine months).

Additionally, if you refinance or consolidate your Perkins loans, you are not eligible for this forgiveness program.

We’ve broken down the options into categories based on how much of your loan can be forgiven and type of service.

1. Up to 100% Forgiveness

The most comprehensive in terms of job options is for up to 100% loan cancellation for five years of service. The amount forgiven is granted in increments:

  • 15% for the first and second years.
  • 20% for the third and fourth years.
  • 30% for the fifth year.

This category includes the following professions:

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  • Teacher. To qualify for the Perkins Loan Teacher Cancellation, you must either teach at a low-income school or teach one of the following subjects: mathematics, science, foreign languages, bilingual, special education or another subject area that is facing a shortage of qualified teachers in your state.
  • Employee at a child or family services agency.
  • Faculty member at a tribal college or university (for service that began on or after Aug. 14, 2008).
  • Firefighter (for service that began on or after Aug. 14, 2008).
  • Law enforcement or corrections officer.
  • Librarian with a master’s degree working at a Title I-eligible elementary or secondary school or at a public library that serves Title I-eligible schools (for service that began on or after Aug. 14, 2008).
  • Nurse or medical technician.
  • Professional provider of early intervention disability services.
  • Public defender (for service that began on or after Aug. 14, 2008).
  • Speech pathologist with master’s degree working at a Title I-eligible elementary or secondary school (for service that began on or after Aug. 14, 2008).

If you’re an educator at a pre-K or licensed childcare program (for service that began on or after Aug. 14, 2008) or a Head Start program, it will take seven years to forgive the loan, which is granted in the following increments:

  • 15% for the first six years.
  • 10% for the seventh year.

2. Up to 70% Forgiveness

AmeriCorps VISTA or Peace Corps volunteers can get up to 70% of their loans forgiven for four years of service. Cancelation is also granted in increments:

  • 15% for the first and second years.
  • 20% for the third and fourth years.

3. Forgiveness for Military Service

Those who serve in the U.S. armed forces in a hostile fire or imminent danger pay area qualify for Perkins loan cancellation according to the following classifications:

  • Up to 50% for four years for borrowers whose active duty service ended before Aug. 14, 2008.
  • Up to 100% for five years for borrowers whose active duty service includes or began on or after Aug. 14, 2008.

4. 100% Discharge

Discharge and forgiveness essentially mean the same thing — they wipe out your student loan — but a discharge is due to circumstances, while forgiveness is dependent upon your line of work. The following conditions are eligible:

  • The school closed before the borrower could complete the program of study (applies to loans received on or after Jan. 1, 1986).
  • The borrower is totally and permanently disabled.
  • The borrower died. (Read more about a student loan death discharge here.)
  • The borrower filed for bankruptcy — but only if the bankruptcy court rules that repayment would cause undue hardship. (That’s rare.)

How Do I Apply?

To qualify for a Perkins loan cancellation or discharge, you’ll need at least one year of professional experience before applying (or one academic year for teachers). 

Because your school is considered the lender (the federal government subsidizes the loan), you should contact your school (or its loan servicer) to obtain the forms and instructions for your Perkins loan forgiveness.

Every school has its own application, but in general, you’ll need to fill out your personal information, your type and length of service, and certification from your employer.

What Happens if I Receive Forgiveness?

If you’re approved for Perkins loan forgiveness, the principal amount of your loan will be canceled incrementally according to the schedule associated with your forgiveness classification. Any interest that the loan accrued during that year will also be forgiven.

What Happens if I Don’t Receive Forgiveness?

If you’re denied Perkins loan forgiveness, all is not lost, particularly if you have other federal loans to consolidate. Consolidation disqualifies your loans for the Perkins loan forgiveness program, but by consolidating your Perkins loans, they then qualify for Public Service Loan Forgiveness.

However, keep in mind that your Perkins loans must be paid in 10 years, so there’s a good chance you’d have your loans paid off before you reached the 10 years of service the Public Service Loan Forgiveness program requires. 

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.