The state Perkins student loan program is no longer active for new applicants, but if you have old Perkins loans from your college days, you may be eligible for a Perkins loan forgiveness. The option is open to borrowers who work in the public sector.

If you have Perkins student loans and think you qualify for forgiveness, here’s what you need to know.

What is a Perkins federal loan and how does Perkins loan forgiveness work?

Perkins student loans were low-interest student loans that schools could distribute to undergraduate and graduate students in financial need. Undergraduate students could borrow up to $27,500 and graduate students could borrow up to $32,500. The Perkins loan program ended on September 30, 2017, with final disbursements due June 30, 2018.

While no new Perkins loans will be made, student borrowers who still have Perkins student loans may be eligible for up to 100 percent debt relief if they meet certain criteria. The amount of forgiveness you are entitled to and the frequency of termination depends on your career choice and the length of time you have stayed in that job, but all qualifying jobs fall within the public service.

With some exceptions, forgiveness generally occurs in increments rather than all at once over a five-year period. Here is the schedule for most qualifying jobs:

• 15 percent of the original loan amount for the first and second year.
• 20 percent of the original loan amount for the third and fourth years.
• 30 percent of the original loan amount for the fifth year.

Note that the cancellation of the Perkins loan is not taxable, so you don’t have to worry about a significant tax bill for the year you receive the forgiveness.

Who Qualifies for Perkins Loan Forgiveness?

Perkins Loan Cancellation is available to borrowers who have borrowed under the program and work in any of the following government sectors:

• Teacher.
• nurse or medical technician.
• firefighter.
• Qualified professional provider of early intervention services.
• Faculty member at a tribal college or university.
• Speech therapist with a master’s degree working at a Title I-qualified elementary or secondary school.
• Librarian with a master’s degree working in an elementary or secondary school eligible for Title I, or in a public library.
• law enforcement or correctional officer.
• Lawyer employed by a federal public or local defense organization.
• Employees of a public or private non-profit child or family service agency that provides services to high-risk children and their families from low-income communities.
• Employees in the education component of a Head Start program.
• Employees in the educational component of a state-approved or regulated pre-kindergarten or child care program.
• Military service member of the United States Armed Forces in enemy fire or an imminent danger zone.
• AmeriCorps VISTA or Peace Corps Volunteer.

How to Apply for Perkins Loan Forgiveness

Because the Perkins student loan program is school-based, you must contact the school that originally granted the loan or the student loan servicer that manages your college loan account if you feel you may be eligible for a Perkins termination – Have a loan.

Your school or student loan administrator has the forms needed for your specific type of cancellation and can answer any questions you may have about the process. You must provide evidence that you have worked in a qualifying job during the period for which you are applying. Also, keep in mind that most forms of Perkins loan forgiveness require full-time employment, so you may not be eligible if you worked part-time.

What to do if you do not qualify for Perkins Loan Forgiveness

If you are not eligible for termination of the Perkins loan because you do not meet the employment eligibility requirements, there are a few alternatives that you can pursue.

For starters, think about whether your career path might ultimately qualify you for forgiveness. For example, if you’ve been working part-time at a suitable job and are planning to transition to full-time, you may be able to start the Perkins loan forgiveness clock and it makes sense to leave your debt where it is.

If repaying the Perkins loan is not an option, here are some possible options to consider:

• Consolidate your loans: Perkins loans do not qualify for Public Loan Forgiveness (PSLF) or income-based repayment plans. But when you consolidate your loans through the Direct Consolidation Loan program, you’re eligible for both. If you think you may qualify for PSLF or need a cheaper monthly payment, consolidation may suffice.
• Refinance student loans: If you’re looking for ways to make your loan more affordable, it might be worth refinancing your student loans. Some private lenders may be able to offer you a lower interest rate than the standard 5 percent on Perkins loans. Additionally, private refinance lenders can offer more flexible repayment options, giving you between five and 25 years to repay in some cases, which can give you more control over your repayment schedule.

As you consider each of these options, think about your current financial situation and your goals with your Perkins loan debt. Keep in mind that to refinance your loans you generally need a good credit history and an annual income, or at least have a co-signer who has those qualities.

But before you think about consolidating or refinancing your Perkins loans, both of which preclude future Perkins loan forgiveness, you should carefully review the federal programs available to you. Refinancing completely cuts you off from canceling the Perkins loan even if you eventually meet employment requirements.

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