Perkins Loans (formerly called National Direct Student Loans, and before that National Defense Student Loans) are low-interest loans for both undergraduate and graduate students with exceptional financial need. Perkins Loans are originated and serviced by participating schools and repaid to the school. The government does not insure the loans, but instead provides money to eligible institutions to help fund the loans. If you default on a Perkins loan, it is usually the school that will come after you to collect. In some cases, the school will assign a Perkins loan to the Department of Education. In 2015, Congress chose not to keep the program. Then, in December 2015, President Obama signed a law temporarily extending the Perkins loan program for two years for eligible undergraduates and one year for eligible graduate students.
Perkins loan repayment plans are different from FFELs and Direct Loans. For example, Perkins loans have minimum monthly repayment rates, set by law. The current rate is $30 for an NDSL loan or a Perkins Loan made before October 1, 1992 and $40 after that date.
Schools are allowed to extend the repayment period due to a prolonged illness or unemployment. Extensions may also be granted if you qualify as a low-income individual. Interest continues to accrue during any extension of a repayment period.
The Department of Education suggests that borrowers contact their school or the school’s agent to get exact Perkins repayment amounts. If the school holds the loan, you should expect to hear from the school about payment and other issues. Be aware that many schools assign Perkins loans to the Department of Education.
Typical Perkins Repayment Amounts
| Total Loan Amount | Number of Payments | Approximate Monthly Payment | Total Interest Charges | 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: The Guide to Federal Student Aid, 2009-10
Perkins Rehabilitation
Perkins loan borrowers may also rehabilitate defaulted loans. Borrowers must make on-time payments for nine consecutive months. The “full monthly payment” is defined as a payment that is paid within twenty days of the due date each month.
The Perkins Loan Program regulations do not explicitly state that the payments must be reasonable and affordable but rather that they must be determined by the school. Loans reduced to judgment may not be rehabilitated. Borrowers are also ineligible if they pleaded nolo contendere or guilty to a crime involving fraud in obtaining federal student assistance.
As is true for FFEL and Direct loan rehabilitations after August 2008, Perkins loans may be rehabilitated only once, but there should not be a limit to the number of times a borrower is permitted to attempt rehabilitation. Collection costs related to Perkins loan rehabilitations cannot exceed 24%.