The Federal Perkins Loan Program is a source of low-interest loans for both undergraduates as well as graduate and professional students, with awards going first to students who show exceptional need.

Although the law requires that priority for Perkins Loan funds be given to student who demonstrate exceptional need, it does not define exceptional need. You should be aware that the definition of exceptional need will likely vary from school to school; consequently, a student's eligibility for Federal Perkins Loan will also vary from school to school. Before an undergraduate student can receive a Perkins Loan, the school must determine his or her eligibility or ineligibility for a Federal Pell Grant.

Currently, an eligible student may borrow up to:

• $3,000 annually as an undergraduate;
• $5,000 annually as a graduate or professional student;
• $15,000 aggregate as an undergraduate student;
• $30,000 aggregate as a graduate or professional student, including any amount borrowed as an undergraduate.

Institutions may also have special agreements with the Department of Education through the Expanded Lending Option whereby borrowers attending their institution have access to slightly higher annual and aggregate Federal Perkins Loan limits. Higher annual and aggregate loan limits may also be allowed for study abroad.

The current interest rate is 5%; however, interest does not begin to accrue until 9 months after the student ceases to be enrolled on at least a half-time basis. Repayment begins nine months after graduation or termination of enrollment on at least a half-time basis. Students may be allowed up to ten years to repay the amount they have borrowed from the Federal Perkins Loan Program.

There are provisions for deferment of repayment for a variety of situations. For loans made on or after 7/1/93, deferments are available to borrowers who are:

• Enrolled and in attendance at least half-time as a regular student;
• Enrolled and in attendance as a regular student in a course of study that is part of an ED-approved graduate fellowship program;
• Engaged in graduate or post-graduate fellowship-supported study outside the U.S., such as a Fulbright Grant;
• In ED-approved rehabilitation training for disabled individuals;
• Seeking but unable to find full-time employment (maximum of 3 years cumulative);
• Experiencing economic hardship (maximum of 3 years); and
• Engaged in service eligible for cancellation of that loan.

Finally, some Perkins Loan borrowers are eligible to have all or part of their loans canceled, including those who enter specific fields of teaching, teach in designated schools, work in Head Start Programs, provide certain health care services, provide early intervention services, work in a child or family service agency, serve in the military in areas designated as hostile or in imminent danger, volunteer under the Peace Corps or the Domestic Volunteer Service Act of 1973, or serve as law enforcement or corrections officers. A percentage of an eligible borrower's Federal Perkins Loan will be canceled for each completed year of service in one of these categories, including the interest that accrued during that year.