The program was started in Eligibility was determined based on information provided by the student on the Free Application for Federal Student Aid FAFSA form, and loans were granted directly from the school's financial aid office. This means that the school was the lender, with the government acting as the subsidizing body. Interest payments were made by the government while the borrower was in school.
About , loans were granted to students before the program expired on Sept. Final disbursements were made on June 30, If you are still in school and attending at least half-time, you have nine months after you graduate, leave school, or drop below half-time status before you must begin repayment. If you are attending less than half-time, the Department of Education suggests checking with your school to find out the length of your grace period.
Perkins Loans must typically be repaid in full within 10 years following the completion of the nine-month grace period. Students typically repay the loan directly to their school or to a designated loan servicer. When it comes time to repay your Perkins Loan, you may also have a number of other options. Your school's financial aid office or its loan servicing company can explain the options available in your case. If you're unable to start payments after the nine-month grace period, you can apply for deferment or forbearance to postpone repayment.
If you have a Perkins Loan from a previous school that's coming due—and you are still attending school at least half-time—you could be eligible for an in-school deferment. If you work in a public-service job—teaching, nursing, or firefighting—you may be eligible to have all or a portion of your Perkins Loan debt canceled after a certain period of time.
Your loan may also be discharged under certain circumstances. These may include personal bankruptcy , total disability, or death. You may also qualify for a discharge if your school shutters its doors.
Perkins Loans can be eligible for repayments adjusted to suit your income level, but only if you consolidate them into a federal direct consolidation loan.
The Department of Education cautions that "if you have federal Perkins Loans and you are employed in an occupation that would qualify you for Perkins Loan cancellation benefits, you should not include your Perkins Loans when you consolidate.
If you're in an occupation eligible for loan cancellation, don't consolidate your Perkins Loan into a federal direct plan. There are four income-driven repayment plans, which differ slightly in their details:. With all four income-driven repayment plans, any remaining loan balance is forgiven once you've made the required payments for the required number of years.
You can consolidate your federal loans and also learn more about the process using the Direct Consolidation Loan Application on the U. Department of Education's Federal Student Aid website. The American Rescue Plan passed by Congress and signed by President Biden in March includes a provision that student loan forgiveness issued between Jan. Although the federal government canceled the Perkins Loans Program, it still offers other student loans for those who demonstrate a need for financial aid.
Some of these include:. The amount of the loan is determined by your school and cannot exceed that limit. The term subsidized refers to the fact that the Department of Education covers the interest payments while you are still in school just like the Perkins program.
But there's one caveat—Direct Subsidized Loans are available only to undergraduate students. These loans are available to both undergraduate and graduate students regardless of financial need. Just like direct loans, the amount of your unsubsidized loan is determined by your school. But here's the difference between subsidized and unsubsidized loans —you are responsible for making interest payments even while you're in school.
Any interest that is not made while you are in school or during the nine-month grace period after graduation is capitalized, which means it's added to your principal balance. This program is intended to act as financial aid for undergraduate, graduate, and professional students.
Unlike the other two programs, the borrower is the student's parent. Guaranty agencies pay off the lenders when borrowers default, and in turn, are reinsured by the Department of Education. There are limits on the amount in subsidized and unsubsidized loans that you may be eligible to receive each academic year annual loan limits and the total amounts that you may borrow for undergraduate and graduate study aggregate loan limits.
The actual loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on what year you are in school and whether you are a dependent or independent student. If you are a dependent student whose parents are ineligible for a Direct PLUS loan, you may be able to receive additional Direct Unsubsidized Loan funds. The Department posts information to help you determine whether you are a dependent or independent student.
The Department has a fact sheet with information about the different types of loans and borrowing limits. The federal student loan programs are highly regulated by Congress and the U. Department of Education. The maximum interest rates, and many of the important terms of federal loans are set by Congress, and are similar in both the FFEL and Direct Loan programs. There are, however, a few important differences in available repayment plans for FFEL and Direct borrowers.
For example, you must be in the Direct Loan program to qualify for public service forgiveness. The good news about federal government loans is that there are many different programs available to help you if you are having trouble repaying these loans. There are even ways to cancel these loans in limited circumstances. The bad news is that the federal government has extraordinary powers to collect student loans if you default.
These powers, such as tax refund and federal benefits offsets, have no time limit. Federal student loan amounts and terms for loans issued in Stafford loans are for undergraduate, graduate and professional students enrolled at least half-time.
Stafford loans may be subsidized or unsubsidized. A subsidized loan is awarded on the basis of financial need, and the government pays the interest before repayment begins or during authorized periods of deferment.
Unsubsidized loans are not awarded based on financial need and borrowers are responsible for all interest. The fixed interest rate for undergraduate Stafford loans first disbursed on or after July 1, and before July 1, is 4. The rate for graduate students is 6. Most older loans from before July have variable interest rates. After , the interest rates are fixed, but change almost every year. The Department of Education web site has information about the fees the government charges when you take out a Stafford loan.
There are limits on the amount of Stafford loans you can borrow. Stafford loan limits vary depending on whether you are financially dependent or independent. The higher independent student limits also apply to dependent students whose parents are unable to borrow PLUS loans.
The Department of Education web site has information about the fees the government charges when you take out a PLUS loan. Unless the lender determines that extenuating circumstances exist, you will not pass the credit check if you:.
Consolidation is similar to refinancing a loan. You can consolidate all, just some, or even just one of your student loans. Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.
Direct consolidation loans are now the only type of federal student consolidation loan. Under the Direct Loan Consolidation Program, you can consolidate just about any type of federal student loan into a new Direct consolidation loan. Many borrowers consolidate their loans and pursue Public Service Loan Forgiveness, which is not necessary if you already have federal Direct Loans.
Only payments made under an income driven repayment plan, or a ten year standard plan count for PSLF purposes. You can read the full eligibility rules for PSLF here.
You can consolidate your federal student loans at www. There is no fee to do this. You will also be prompted to choose a repayment plan and will have the option to choose which loan servicer if you have a preference. The process generally takes up to 60 days. You are required to continue to make your payments during this process. The following loans are eligible for federal Direct Loan consolidation. With some exceptions, you may only consolidate once. Private, state, institutional and other education loans are never eligible for federal consolidation.
You also may only consolidate loans that are under your own name. Defaulted federal student loans may be ineligible for consolidation if they are currently under a wage garnishment or judgment order.
If they can be consolidated, you may be required to make several on time payments before the loans are released for consolidation. You may also be required to utilize an income driven repayment plan if you consolidate a defaulted loan.
Private loan consolidation can also be a way of having your co-signer removed from responsibility for the loans. You should only attempt private loan consolidation if your credit, including your debt to income ratio, will garner you a lower interest rate or other more beneficial term.
Private loan consolidators can be picky in who they choose to accept for consolidation. Those companies with more lenient credit criteria tend to have higher interest rates.
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