How Federal Perkins Student Loans Work: Applying for a Student Loan from the Federal Government

Federal Perkins student loans were introduced to help lower income families fund the cost of a college education. These flexible, low interest student loans are currently available at 1,800 participating post-secondary institutions. Based on specific guidelines, each financial aid administrator has the freedom to determine how much or whether a fixed rate student loan should be offered to applicants.

Federal Perkins Student Loans Qualification

The qualifying criteria are established by the U.S. Department of Education based upon a specific congressional formula. The Expected Family Contribution (EFC) is based upon the following criteria:

  • The income of the student. If financially independent, it will also be based upon assets.
  • Parental income. The parents’ income is only taken into account if financially dependent.
  • Size of the family unit. The number of family members attending post-secondary education. This figure specifically excludes parents in the calculations.

The EFC is based upon the remaining income (after deducting living expenses) and the value of assets (after subtracting the asset protection allowance). Different criteria are used for determining the figures for dependent students. Once a Free Application for Federal Student Aid (FAFSA) has been filed, a Student Aid Report (SAR) will be received by the individual or academic institution.

Low Interest Student Loans

Applying for a student loan is an involved process, but a successful application could lead to a fixed-rate loan at 5% (although this is subject to change). Other than winning an award or scholarship, a Federal Perkins student loan represents the most affordable way of funding a college education. However, due to the means test, it won’t be available to all applicants.

Non Credit Based Student Loans

Financial institutions always check credit before lending money. Other than it being a low interest student loan, borrowing money for college from the federal government is popular because it doesn’t involve a credit check. This means that it is suitable for those with missed payments, defaults and delinquencies. It is also available for those who don’t yet have a credit history.


Student Loan Forgiveness Programs

College graduates who have taken out Federal Perkins student loans may be able to get part of their borrowing canceled. Individuals, such as teachers, nurses, armed forces and other public posts, may be eligible to write-off up to 100% of the principal through a student loan forgiveness program. The school will be directly reimbursed any money that is forgiven by the federal government.

Federal Perkins student loans are only available to applicants who are in financial need. Those who qualify under the means test will be eligible for a low rate of interest without the need for a credit check. Applying for a student loan is a very involved process and shouldn’t be left until the last minute.

It is also important to consider ways to pay off student loans upon graduation.