How A Federal Perkins Loan Works

by David

college, loans, student loans and financial aid

The Federal Perkins Loan is another great option to pay your way through an undergraduate or graduate education.

This type of student loan is very similar to the Stafford subsidized loan. However, the Perkins Loan is distributed by the school.

In order to receive the funds from a Perkins Loan, you must qualify based on financial need.


In addition to financial need, the Perkins Loan requires that you meet the following qualifications:

  • You must be enrolled at least half-time in a degree program
  • You must be a U.S. citizen, permanent resident, or eligible non-citizen
  • You must not have defaulted on any prior loans


The main benefit of the Perkins Loan is the flat 5% interest rate. Additionally, like the Stafford subsidized loan, interest incurred while in school and during the 9-month grace period is paid for (subsidized) by the government.

One notable difference between the Stafford Loan and the Perkins Loan is the length of the grace period. It’s 9 months for the Perkins Loan and 6 months for the Stafford subsidized loan. Additionally, there are no loan origination or default fees for the Perkins Loan and its repayment period is 10 years.

The way the Perkins Loan works is that the government provides money to colleges, who then act as the lender with the students. So in order to apply for the loan, you must fill out a Free Application For Federal Student Aid and apply with your school.

Once eligible, the college’s financial aid office will award you a certain amount in loans. The school will either write you a check for the amount you are approved for, or they will apply the loan to your school fees.


The maximum Perkins Loan amounts are as follows:

  • Undergraduates can receive no more than $4,000/year in loans.
  • Graduate students can receive no more than $6,000/year.
  • Additionally, there are cumulative limits of $20,000 for undergraduates and $40,000 for undergraduate and graduate loans combined.