How Perkins Loans Work

Repaying a Perkins Loan

As previously mentioned, the grace period associated with a school loan is the period of time after the student graduates, drops below half-time status or leaves school and before the first payment on the loan is due. With most loans, including Stafford and Parent PLUS, the grace period is usually six months. But with Perkins Loans, the grace period is usually 9 months -- extra time that can prove invaluable for new graduates establishing themselves after college.

Once the grace period expires, borrowers have up to ten years to repay the balance of the loan and any accrued interest. Remember, as a borrower, you don't have to pay interest while you are enrolled in school and during the grace period. The monthly payment depends on the amount of the loan and the length of your repayment period.

Of course, a lot can happen in ten years, and making a regular student loan payment may not always be feasible. To help mitigate unexpected events that might interrupt payment, borrowers can request a temporary lowering or suspension of their monthly payment. For example, if a borrower is in school or in the grace period when called to active duty in the military, the lender is required to maintain the status of the loan for the duration of the assignment, up to three years. If the borrower has already started paying back the loan, then the lender is required to grant forbearance, which is essentially putting payments temporarily on hold [source: Student Loan Network]. Similar terms apply for Peace Corps service and economic hardships. Borrowers should consult their universities for details since programs may vary between institutions.

And don't forget about student loans when it comes to filing taxes. Interest paid on federal and non-federal loans for higher education may qualify you for a maximum deduction of $2,500 per year [source: Student Loan Network].

Finally, a Perkins Loan will be canceled if the borrower dies or becomes permanently disabled. There are other situations in which a Perkins Loan may be forgiven, which are discussed in the sidebar on this page.

Learn lots more about Perkins and other student loan options by visiting the links below.

Related HowStuffWorks Articles

More Great Links


  • Dakss, Brian. "Student Loan Payback Strategies." CBS News (May 23, 2007)
  • Funding Education Beyond High School: The Guide to Federal Student Aid, 2009-2010. (February 21, 2010)
  • Kittredge, Betsy Miller. "A Landmark Investment in America's Economic Future." Committee on Education and Labor. (July 15, 2009)
  • McCluskey, Neal. "SAFRA Stinks: Why a student loan bill you've never heard of is so worrisome." (August 10, 2009)
  • Sallie Mae. "Federal Perkins Loans." (February 20, 2010)
  • Student Loan Network. "Federal Perkins Loan Program." (February 20, 2010)
  • U.S Department of Education. "The Federal Role in Education." (February 19, 2010)
  • U.S Department of Education. "The Federal Perkins Loan Program." (February 19, 2010)
  • U.S. Department of Education. "Your Federal Student Loans: Learn the Basics and Manage Your Debt."