CFDA Number: 84.038
Program Type: Formula Grants, Loans
Also Known As: Formerly National Defense Student Loans, National Direct Student Loan, and Perkins Loan Program
The Federal Perkins Loan Program provides low-interest loans to help needy
students finance the costs of postsecondary education. Students can receive Perkins
loans at any one of approximately 1,800 participating postsecondary institutions.
Institutional financial aid administrators at participating institutions have
substantial flexibility in determining the amount of Perkins loans to award to
students who are enrolled or accepted for enrollment. Borrowers who undertake
certain public, military, or teaching service employment are eligible to have
all or part of their loans canceled. In general, schools are reimbursed for 100
percent of the principal amount of the loan canceled, and the reimbursement must
be reinvested in the school's revolving loan fund. These institutional reimbursements
for loan cancellations are an entitlement.
Loan volume in the program comes from: (1) newly appropriated FCC contributions
and loan cancellation payments; (2) an institutional matching contribution equaling
at least one-third of the FCC contribution; and (3) school-level collections on
prior-year student loans.
Financial need is determined by the U.S. Department of Education, using a
standard formula, established by Congress, to evaluate the financial information
reported by the student on the FAFSA. The information from the FAFSA then determines
the student's expected family contribution (EFC). The fundamental elements in
this standard formula are the student's income (and assets, if the student is
independent), the parents' income and assets (if the student is dependent), the
family's household size, and the number of family members (excluding parents)
attending postsecondary institutions. The EFC is the sum of: (1) a percentage
of net income (remaining income after subtracting allowances for basic living
expenses) and (2) a percentage of net assets (assets remaining after subtracting
an asset protection allowance). Different assessment rates and allowances are
used for dependent students, independent students without dependents, and independent
students with dependents. After filing a FAFSA, the student receives a Student
Aid Report (SAR) or the institution receives an Institutional Student
Information Record (ISIR), which provides the student's EFC.
FSA Handbook: Federal Perkins Loan
