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What Are Perkins Loans? How Do I Qualify?

written by: •edited by: Wendy Finn•updated: 10/16/2012

In their most simplistic terms Perkins Loans are a low interest student loan option for undergraduate and graduate students. The loans are offered by a schools financial aid office and are given to students based on exception needs.

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    shutterstock 89526160 Perkins Loans are student loans that charge a low 5% interest rate to borrowers. These loans do not need to be paid back until the time that a student graduates from college, drops below half time, or drops out of school. Repayment begins after 9 months from the time any of those circumstances begin.

    The loans allow for up to $5,500/year to be borrowed, with a cap of $27,500 during undergraduate studies. While graduate students can borrow up to $8,000 per year with a cap of $60,000 which includes their undergraduate Perkins loans.

    Perkins loans also require no loan fees, which means the amount you borrow plus interest will be your only fees (minus any type of late fees you incur for non-payment).

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    Do I Qualify For Perkins Loans?

    Not everyone who applies will qualify for Perkins Loans. In fact the U.S Department of Education uses a very specific standards formula to determine who can receive these types of loans. The determining factors are part of a students FAFSA information and are broken down using the following information: family household size, the number of household members attending postsecondary institutions and parental income minus living expenses.

    Family Contribution

    According to the U.S. Department Of Education the Expected Family Contribution (EFC) is based on the following information:

    "The EFC is the sum of: (1) a percentage of net income (remaining income after subtracting allowances for basic living expenses) and (2) a percentage of net assets (assets remaining after subtracting an asset protection allowance)."

    To determine if you qualify I would recommend filling out the FAFSA application within the timeframe provided by the program.

    Loan Application Website:

    Is Your School Eligible?

    Also, you must ensure that your school participates in the Perkins Loan program, currently nearly 1600 post secondary instutitions participate in the program.

    Independent students, students with independents and wards of the state also qualify based on separate EFC standards. For students in these type of situations I suggest contacting your schools financial aid office for qualifying information.

    Other Requirements:

    You must be a legal U.S. citizenship, have permission of permanent residency, or be an eligible non-citizen status You must have "Satisfactory academic progres" which is determined at the time of the loan application You can not have any type of unresolved defaults or overpayments, specifically for Title IV education loans or grants

    Enrolled at an school at least half-time in a degree program U.S. citizenship, permanent residency, or eligible non-citizen status Satisfactory academic progress No unresolved defaults or overpayments owed on Title IV education loans and grants

    • Must be enrolled at an eligible school with at least half-time enrollment status
    • Must be a legal U.S. Citizen, have legal permanent residency or have eligible non-citizen status
    • You must not have any UNRESOLVED default or overpayments with Title IV education loans or grants

    If you do have any unresolved loan issues you can still receive Perkins Loans in most cases once those issues have been resolved.

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    How Do I Receive My Perkins Loans?

    Once your loan has been approved and you've signed the required promissory note your loan can be disbursed in two ways. The first option deposits the loan directly into your student account to offset the cost of tuition and other school fees. The second option provides you with a check which can be deposited into your bank account. If other loans have already paid off your tuition and school related costs the check option will be used.

    Perkins loans are typically disbursed in two payments over the period of a school year (one check or student account deposit per semester).

    If you don't want the entire amount offered by your Perkins Loan you can also request a smaller loan amount through your student financial aid office.

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    Is This for You?

    Will this loan work for you? A Perkins Loan is given to undergraduate and graduate students with "exceptional" financial needs based on their FAFSA application. The most helpful place for these types of loans is your schools financial aid office. They can guide you through the FAFSA process and help you get your school based finances in order.