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