Federal Perkins Loan Program

A Perkins Loan is a low-interest Federal student loan for both undergraduate and graduate students with higher financial need. Independent students (such as graduate students, or undergraduates with independent status) generally have a higher chance of receiving these loans. Federal Perkins Loans are disbursed through a school's financial aid office. The school is the lender, and the loan is made with government funds.

The interest rate on these loans is set at 5% for the 2014-2015 school year.

Application Process

Students must file the Free Application for Federal Student Aid (FAFSA) in order to become eligible for a Perkins Loan. The participating school will assess the student’s financial need based on this form and calculate the loan amount a student may be eligible for.

Once approved, the school will pay the student directly (usually by check), or the funds are automatically applied to any school expenses the student may have. The loan will be disbursed in at least two separate payments during the academic year. The student borrower must repay this loan to the school.

Borrowing Limits

Depending on when the student applies, their level of need and the school's funding level, the borrowing limits are:

  • $4,000 for each year of undergraduate study (the maximum a student can borrow as an undergraduate is $27,500)
  • $8,000 for each year of graduate or professional study (the maximum a student can borrow as a graduate/professional student is $60,000, including any Federal Perkins Loans borrowed as an undergraduate)


Students attending school at least half-time have a grace period of nine months after graduation or dropping below half-time status before they must begin student loan repayment. This is longer than most other loans which only allow a grace period of six months. Students on active duty can extend this grace period.

Students attending less than half-time should check with their financial aid administrator to determine the grace period. At the end of the grace period, students must begin repaying the loan.

Monthly payments depend on the size of the student's debt and the length of the repayment period. The table below shows typical monthly payments and total interest charges for three different 5% loans over a 10-year period.

Examples of Typical Monthly Payments for Perkins Loans

Total Loan Amount Number of Payments Approx. Monthly Payment Total Interest Charged Total Repaid
$4,000 120 $42.43 $1,091.01 $5,091.01
$5,000 120 $53.03 $1,364.03 $6,364.03
$15,000 120 $159.10 $4,091.73 $19,091.73

(Source: U.S. Department of Education)

Related Fees

There are no additional charges or fees to take out a Perkins loan. However, a student may be required to pay a fee or collection cost if he or she:

  • Skips a payment
  • Makes a late payment
  • Makes less than a full payment
  • Continues to avoid payments

Tax Incentives

There are tax incentives for certain higher education expenses, including a deduction for student loan interest for certain borrowers. This benefit applies to federal and non-federal loans used to pay for postsecondary education costs. For more information on these and other tax benefits, visit our tax cuts page.

1 The U.S. Department of Education (ED) has issued special guidance for those called to active duty as a result of the September 11 terrorist attacks. If a borrower's loans are in an in-school status, in-school deferment status, or in a grace period when the borrower is ordered to active duty or reassigned, the loan holder must maintain the loans in that status during the period of the borrower's active duty service or reassignment, plus the time necessary for the borrower to resume enrollment in the next regular enrollment period reasonably available to the borrower. The maintenance of loan status may not exceed a total of three years, including the period of time necessary for the borrower to resume enrollment.