Perkins Loans Are Better than Stafford's | 03.13.09

Posted in Student Loan Links By Kristin Morris

It’s true; if you can secure a Federal Perkins loan through your school it is a better option than a Stafford loan. The Perkins Loan Program provides low-interest loans to help needy students finance the costs of postsecondary education. Perkins loans hold a fixed interest rate of 5%, while subsidized Stafford loan are at 5.6% for the 2009-2010 academic year and 6.8% for the unsubsidized.

The problem with the Federal Perkins loan, however, is that there are more eligible students than there are loans to give. Perkins loans are awarded through the school, and are part of a revolving loan fund. A revolving loan fund just means the available funds in the pool are dependent on former students who are paying back money from their Perkins loans from previous years. As a result the number of students who receive a Perkins loan from a school can change from year to year. Additionally, the Perkins loans are awarded on a first come first serve basis, which is why completing your fafsa early is pivotal.

Students can receive Perkins loans at any one of approximately 1,800 participating postsecondary institutions. Institutional financial aid administrators at participating institutions have substantial flexibility in determining the amount of Perkins loans to award to students who are enrolled or accepted for enrollment.

Borrowers who undertake certain public, military, or teaching service employment are eligible to have all or part of their loans canceled. Below is a list of loan discharge conditions for the Perkins loan.

Cancellation Conditions Amount Forgiven
Bankruptcy (in rare cases – cancellation is possible only if the bankruptcy court rules that repayment would case an undue hardship 100 percent
Closed school (before student could complete program of study) – applies to loans received on or after Jan.1, 1986 100 percent
Borrower’s total and permanent disability or death 100 percent
Full-time teacher in a designated elementary or secondary school serving students from low income families Up to 100 percent
Full-time special education teacher (includes teaching children with disabilities Up to 100 percent
Full-time qualified professional provider of early intervention services for the disabled Up to 100 percent
Full-time teacher math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas Up to 100 percent
Full-time employee of a public or nonprofit child or family services agency providing services to high-risk children and their families from low-income communities. Up to 100 percent
Full-time nurse or medical technician Up to 100 percent
Full-time law enforcement or corrections officer Up to 100 percent
Full-time staff member in the education compnent of a Head Start Program Up to 100 percent
VISTA or Peace Corps volunteer Up to 70 percent
Service in the U.S. Armed Forces Up to 50 percent

Five most recent Stafford loan help blog posts:


5 Most Recent Student Loans Blog Posts:


The Student Loan Help blog is sponsored in part by:


Leave a Reply

By clicking 'Submit Comment', you agree to the Edvisors Terms of Use and Privacy Policy.