Perkins Loan Cancellation and Discharge
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Federal Perkins Loans are federal subsidized loans that were made to students with exceptional financial need. The federal government allocates the funds for these loans to participating schools. These loans were originated and are serviced by the schools themselves. Though there are many Perkins Loans still outstanding, the U.S. Department of Education stopped allowing new loans under this program after 9/30/2017. The final disbursements allowed were through 6/30/2018.
Written by Attorney John Coble.
Updated June 7, 2023
Federal Perkins Loans are federal subsidized loans that were made to students with exceptional financial need. The federal government allocates the funds for these loans to participating schools. These loans were originated and are serviced by the schools themselves. Though there are many Perkins Loans still outstanding, the U.S. Department of Education stopped allowing new loans under this program after 9/30/2017. The final disbursements allowed were through 6/30/2018.
Though other federal student loans have teacher cancellation and public service loan forgiveness programs, the Perkins Loan forgiveness programs forgive a larger portion of your loan in less time. If you're eligible for Perkins Loans cancellations, it's probably a bad idea to consolidate the Perkins Loan with other federal loans. Doing so would prohibit you from taking advantage of the federal Perkins Loan cancellation programs.
Perkins Loan Forgiveness/Cancellation Programs
Are you, the borrower, eligible for Perkins Loans teacher or public service forgiveness? If eligible, how much of your loan will be forgiven? The following list of professions that meet the eligibility requirements is not complete. Even if not on the list, you may be a teacher for a subject where there is a designated teacher shortage area. See this database for these designated shortage jobs.
The teaching jobs that will allow cancellation of your Perkins Loans include:
A full-time teaching position in a public or non-profit elementary or secondary school that
serves students from low-income families; or
special education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
A teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.
The next question to ask is did your job meet the definition of a "teacher" as prescribed under the Perkins Loans cancellation rules? A school librarian or guidance counselor may be considered a teacher. You don't need certification or a license to be considered a teacher as long as your school system considers you a full-time teacher. You're considered a teacher if your primary job function provides direct and personal educational services to students. For this reason, administrators, researchers, and some other jobs are not considered "teachers." The final determination is based on the written job description of the position.
A special education teacher includes those who provide special services for special education students. For these special service positions, you must be certified or licensed by the appropriate state agency. These positions include:
Language and speech pathologist and audiologists
Physical therapists
Occupational therapists
Psychological and counseling services
Recreational therapists
These teaching positions allow cancellation of large parts of your Perkins Loans for each year of full-time service. For the first and second year, 15% of your Perkins Loans can be canceled each year. For your third and fourth years, 20% of your Perkins loans can be canceled each year. For your fifth year, 30% of your Perkins Loans can be canceled. Therefore, with only 5 years of qualified teaching, you can cancel 100% of your Perkins Loans.
This is much better than other federal loans. For example, the Direct Loans public service forgiveness program requires loan repayment for ten years before they're forgiven. Direct and FFEL loans only forgive up to $17,500.00 for their teacher forgiveness program.
There are many other public service jobs that may qualify you for the cancellation of your Perkins Loans. The table below is a list along with the potential cancellation percentage and time required.
| Position | Time Required for full Cancellation | Maximum Amount Cancelled |
|---|---|---|
| Full-time nurse or medical technician | 5 Years | 100% |
| Full-time firefighter for service on or after 8/14/2008 | 5 Years | 100% |
| Full-time faculty member at a tribal college or university for service on or after 8/14/2008. These tribal schools are the only form of post-secondary teaching eligible for cancellation. | 5 Years | 100% |
| Full-time law enforcement or corrections officer | 5 Years | 100% |
| Full-time attorney employed in a federal public defender or community defender organization for service on or after 8/14/2008 | 5 Years | 100% |
| Full-time employee of a public or nonprofit child- or family services agency providing services to high-risk children and their families from low-income communities and professional provider of early intervention services | 5 Years | 100% |
The list in this table isn't all inclusive. For example, a librarian with a master's degree working in a public library or a teacher at an educational service agency is eligible for Perkins Loan cancellation. A more complete list is available at studentaid.gov.
For positions that require five years for full cancellation, the schedule of cancellation is the same as for teachers over five years. For positions that require seven years for the maximum cancellation, the schedule is 15% for each of the first six years and 10% for the seventh year. For the 70% cancellation for Peace Corps and Americorps, the schedule is 15% for each of the first two years and 20% for each of the last two years.
Applications to have your Perkins Loans forgiven (canceled) are submitted to your school. This is because, unlike other federal loans, the school is the loan holder for loans made through the Perkins Loan program.
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Perkins Loan Discharges
The types of discharge available for federal Perkins Loans are bankruptcy, closed school, death, and disability discharge.
Perkins Bankruptcy Discharge
In most states, discharges in bankruptcy must meet the requirements of the Brunner Test for undue hardship to be discharged in bankruptcy. The Brunner Test requires you, the student loan borrower, to prove:
Based on your current income, you can't maintain a minimal standard of living for you and your dependents while repaying your student loans, and
Your financial situation isn't likely to improve for a significant portion of the loan repayment period, and
You have made a good faith effort to repay your student loans.
Having federal student loans discharged in bankruptcy has gotten easier since late 2022 with the Department of Justice released new guidance for bankruptcy courts on understanding the undue hardship standard.
Let's Summarize...
Perkins Loans cancellations are still available to those with Perkins Loans. If you work in a qualifying job, you should take advantage of these opportunities to have your Perkins Loans completely forgiven in as little as five years. If you don’t work in one of the qualifying professions, you can still discharge your Perkins Loan if you are permanently disabled or if your school closes before you complete your course of study. In some rare cases, your Perkins Loans can be discharged in bankruptcy.
