Are you considering applying for federal financial aid? If so, you might have heard of the Perkins loan program. Perkins loans are government-backed, low-interest loans that are meant to help students pay for school. They come with a lot of great perks, including the opportunity for loan cancellation (that's exactly what it sounds like it is—imagine taking out a loan for school and not having to pay it back!).
If you want to get a Perkins loan for yourself, you've come to the right place. Read on for easy-to-follow instructions on exactly how to apply for a federal Perkins loan.
Note: As of 2017, the Perkins loan program is no longer being run. But don't worry—we'll still give you a few options for what you can do for aid instead!
The End of the Perkins Loan + Other Options for Aid
Unfortunately, the Federal Perkins Loan Program ended officially on September 30, 2017, so you can no longer apply for one of these low-interest loans from the US government.
According to US News, budgetary issues were the main cause behind the decision to end the Perkins loan. The US government initially began to phase out the popular loan program in 2015 before optimistically extending it, only to have it fail to be renewed by Congress in 2017.
Proponents of the program wanted to keep low-interest loan options available to college students who needed them the most, whereas opponents wanted to do away with the program in an effort to centralize student loans.
Now that the Perkins loan is gone, what are some other options for cost-effective ways to pay for college? Here are the best ones to consider:
- Federal Pell Grant: This government-issued grant is awarded to college students who meet specific eligibility requirements regarding income level and other factors. The max award for 2019-20 is $6,195. Because it is a grant, you do not need to pay back the money. All students are automatically considered for the Pell Grant when they submit their FAFSA.
- Federal Supplemental Educational Opportunity Grant (FSEOG): Similar to the Pell Grant, the FSEOG is a government-issued grant for college students who have high financial need. Again, because it's a grant, you do not need to pay back the money you receive from it. You can get anywhere from $100 to $4,000 a year depending on your need.
- Scholarships: It's always a smart idea to apply for as many scholarships as you can! These may include college-specific scholarships (including full-ride scholarships at some schools), scholarships based on SAT/ACT scores, and external scholarships run by organizations and businesses, such as the famous Gates Scholarship and Walmart Scholarship.
- Subsidized Loans: If you have to take out loans, start with these. Unlike unsubsidized loans, the US Department of Education will pay your interest on these loans during certain periods. You also won't accrue any interest if you're in school at least half-time and for the first six months after you graduate.
Hopefully, you now have a clear sense of how you could pay for college, despite no longer having access to the Perkins loan program.
If you're still interested in how the Perkins loan used to work, though, read on for all the details.
The Basics of Applying for Perkins Loans
There's no dedicated or separate application for the Perkins loan; instead, you apply by submitting a Free Application for Federal Student Aid, or FAFSA.
The good news is that even if you're not eligible for a Perkins loan, you're opening up other opportunities for financial aid by submitting a FAFSA. You'll automatically be considered for any federal aid programs. In addition, schools and private scholarships can use information from your FAFSA to award funds.
There's no fee required to submit this application, and turnaround is pretty fast; you should get a report detailing your eligibility for certain federal aid programs in about three days if you submit the FAFSA online.
You'll learn whether you'll be awarded the Pell grant, for example, or whether you're eligible to take out Direct Subsidized loans. Because financial eligibility requirements for Perkins loans vary from school to school, you won't learn about your Perkins eligibility until your school sends you a financial aid package.
In general, Perkins loans are awarded to students who demonstrate exceptional financial need. Unfortunately, demonstrating this financial need doesn't necessarily guarantee that you'll receive the loan, but I'll discuss strategies for increasing your chances later in this post.
The eligibility requirements are therefore a bit strict, but the loans themselves are flexible and come with some serious perks:
- Borrowers are given a nine-month grace period, whereas other federal loans come with a six-month grace period
- Borrowers who take jobs in community service after graduation are often eligible for loan cancellation
- It offers a competitive interest rate of 5%, whereas many private student loans can come with interest rates that are twice as high
Sounds pretty good, right? If you're thinking you have nothing to lose by applying for a Perkins loan, you're right. In the next sections, I'll detail the steps you need to take to submit your best loan application.
How to Apply for a Perkins Loan: 6-Step Guide
Here are the main steps you'll need to follow if you want to apply for a Perkins loan through the FAFSA.
Step 1: Confirm That Your School Participates in the Perkins Loan Program
Although Perkins loans are government-backed, your school would technically be your Perkins loan lender. Fewer schools participate in the Perkins loan program than in other federal loan programs.
You can check with your school's financial aid office to figure out whether they offer Perkins loans. You can also ask what their financial eligibility requirements are for the loan. This might give you a better idea of your chances of getting one before you submit your FAFSA.
Step 2: Check Your Timeline for Submitting the FAFSA
There are a few different deadlines you should be aware of: federal and state. The only deadline that matters specifically for the Perkins loan is the federal one, although if you're submitting the FAFSA at this deadline, there might not be any Perkins funding left for you.
You might be able to get federal aid even after you've finished a year at school (if you're a current college student), so it could be worth your while to apply later on even if you're too late to get the Perkins. Different states (if you also want to be considered for state funding) have different deadlines for applying for student aid. You can check the deadline for your state here.
Schools use information from the FAFSA to put together financial aid packages. Like I mentioned above, you won't actually learn whether you can take out a Perkins loan until you've received this financial aid package.
You can submit your FAFSA as early as January 1 for the year you're entering school. Current college students typically submit their FAFSAs early in their spring semesters for the next academic year.
It's easy to put off completing the FAFSA until the federal or state deadline—don't do this! Perkins money tends to run out quickly since each participating school has a finite Perkins budget. In short, it's first-come, first-served.
Plan on applying as early in the year as possible (January or February). You won't have that year's tax information yet, but that's OK—you can submit estimates and amend those numbers later as needed. That way, schools will have your FAFSA information on hand once you're accepted.
The early bird gets the Perkins loan.
Step 3: Gather All the Information You Need to Complete the Application
Although gathering this information isn't necessarily hard, it can be the most tedious part of the Perkins loan application process. Keep in mind that you'll also need to meet all basic federal aid requirements in order to submit a FAFSA.
Here's all the information you'll need to fill out your FAFSA:
- Your Social Security Number
- Your Alien Registration Number (if you're not a US citizen)
- Your most recent federal income tax returns, W-2s, and any other records of income
- Bank statements and investment records (if applicable)
- Records of untaxed income (if applicable)
- An FSA ID to sign electronically (if you're submitting a FAFSA online; you can make an ID here)
You'll also need all the above information from your parents, even if they won't be helping you pay for school. Your parents' financial information is considered when determining how much aid you might be eligible for.
Here's some more specific information:
- If your parents are married, gather info for both of them.
- If your parent is widowed or single, you just need the financial information for that one parent.
- If your widowed parent is currently remarried, you need info for your parent and his or her spouse.
- If your parents are divorced or separated, you need information for your custodial parent (the parent you lived with the most in the past year). If your parents have joint custody and you've spent equal time with them, you need info for the parent who's supported you the most financially.
If you think your circumstances warrant what's called a "dependency override," in which your parents' financial info is not taken into account (meaning you'd likely get more aid), you'll also need to gather all documentation around your special circumstances (that is, any documentation that would support your claims):
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Common overrides include age, marriage, kids, homelessness, military service, foster care, or legal emancipation
- Answer questions about these circumstances honestly on your FAFSA—the application will process as incomplete, and you'll need to follow up with the financial aid office of the school you're seeking an aid package from
Step 4: Choose Your Submission Method
You can choose to submit either an electronic or paper version of the FAFSA. I recommend that you submit an electronic version, but here are instructions for both methods of submission so you can make a decision that's right for you:
Electronic FAFSA Submission
- It's generally easier to submit online than it is to send in a paper application.
- If you plan to submit online, apply for an FSA ID for you and your parents first! You need an FSA to be able to sign the FAFSA electronically. Be aware that it can take up to three days to get the ID via email, so build this waiting period into your timeline.
- The electronic FAFSA tends to guide you through the application process faster and can notify you of certain errors.
- Electronic submission will get you faster "results"—you'll get your SAR, or Student Aid Report (a document that tells you about your eligibility for federal student aid), in about three days.
Paper FAFSA Submission
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You can get a paper copy of the FAFSA at high school guidance offices, college financial aid offices, and many libraries. You can also download and print the application yourself here.
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Paper FAFSAs are a bit more cumbersome than the electronic version: they take the longest time to file (it can take weeks to get your SAR back) and also tend to cause applicants to make more mistakes, which will ultimately delay the application process for you. As a result, paper filing your FAFSA won't be a good option if you're tight on time.
Step 5: If Possible, Set a Time With Your Parents to Complete the FAFSA
Once you've gathered all the relevant information and chosen your FAFSA submission method, you'll need to plan some time to sit down and actually complete the application.
As I mentioned earlier, you'll need quite a bit of information from your parents or guardians. The form will be much easier to complete if you can sit down with them and go through each section together. Overall, plan on spending one to two hours filling out the application.
A little extra help from the 'rents makes the application process faster and easier.
Step 6: Get Your SAR and Application Status Updates
About three to five days after you've submitted your FAFSA, you'll get an email with directions for accessing your Student Aid Report. The colleges you listed on your FAFSA will have access to your SAR shortly after you do. You can check the status of your application by calling the Federal Student Aid Information Center or logging into the Department of Ed website with your FSA ID.
If your application was complete, your school should be able to use your Student Aid Report to generate a financial aid offer, which can include grants, loans, and scholarships. If you are offered a Perkins loan, it will be included in this financial aid offer.
Your school has the ultimate say in whether you get the Perkins loan. Financial eligibility does not guarantee you'll receive the loan. Schools with better funding or better financial aid programs might be able to offer more Perkins loans to students.
If You're Offered a Perkins Loan, Should You Take It?
So you've gone through all this work to apply for federal financial aid and your school offers you a Perkins loan in your financial aid package. Nice! You can choose to take the loan or you can refuse the aid. What do you do?
First, you should avoid taking on any debt if you have other ways to cover your school's cost of attendance (such as grants or scholarships). Perkins loans are great financial tools, but as with any loan, you'll end up paying back more money than you originally borrowed due to interest (if you don't get 100% of your loan canceled, that is).
To learn more about cost of attendance and budgeting college expenses, check out our college cost guide.
If you've determined that you need to take out loans to help pay for school, the Perkins loan could be a great option for you, particularly if you're planning on working in public service after you graduate. Why? Working in certain fields qualifies Perkins loan borrowers for loan cancellation—you could potentially get up to 100% of your loan canceled, which means you wouldn't end up paying a dime.
If you're deciding between a Perkins loan and another loan, the Perkins loan will almost always be the better financial option. Interest rates are very low, as I mentioned before, and no interest accrues while you're in school or for nine months after you leave. As a result, you'll end up paying less in the long run.
All in all, Perkins loans are great options for students who need to take out loans to finance their education. They're particularly good options for students who are interested in public service. It's hard to go wrong with a Perkins loan!
What's Next?
If you're researching Perkins loans, you should definitely learn more about other federal financial aid programs, too. Check out our expert guides on the Pell Grant, Direct Subsidized loan, and Direct Unsubsidized loan.
Already know all about those federal programs? Then you might want to read up on scholarship opportunities. Learn all about the National Merit Scholarship and Walmart Scholarship.
