How to Consolidate Your Perkins Loans for Student Loan Forgiveness
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- Perkins loans that are not held by the US government are not eligible for Biden’s new student loan forgiveness.
- To receive a rebate of up to $20,000, you must consolidate your loans into direct loans.
- This may not be the best option for everyone, as some Perkins loans are canceled after five years.
If you have private Perkins loans, you may miss President Biden’s $10,000 student loan forgiveness, $20,000 if you received a Pell Grant.
Unlike federal student loans, some Perkins loans are serviced by the school you attended, but the federal government pays interest accrued while you’re still in school. The Perkins loan program ended on September 30, 2017, so schools can no longer provide this type of loan.
Generally, only federally administered student loans are eligible for Biden’s new student loan forgiveness, which is why your Perkins loan may not qualify. If your Perkins loans are held by one of the following managers, you have federally held Perkins loans:
- FedLoan Service (PHEAA)
- Great Lakes Education Loan Services, Inc.
- OSLA interview
- Default resolution group
To get up to $20,000 in student loan forgiveness for your private Perkins loan, you must consolidate into a direct loan. Here’s how.
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How to complete a Direct Loan Consolidation Application
The first step is to complete a Direct Loan Consolidation Application at studentaid.gov. You will need to login to start the application, but you can also use a read only Where demo request to prepare the real candidacy.
You will need to provide:
- Your full name and former names
- Your social security number
- Your date of birth
- Your permanent address
- Your phone number
- Your email address
- The name, address and telephone number of your employer
You will also need to provide two references – two adults who live in the United States who do not live with you and who have known you for at least three years. You will need to provide the following information regarding your references:
- Phone number
- E-mail address
After you have completed your information and provided references, the next section of the application is titled Loans I want to consolidate. This is what this part of the application will look like:
Only consolidate loans that are not direct loans.
Once you are done with this section, you will complete the next section, titled Loans I don’t want to consolidate. You will list any other student loans you want the federal government to consider when determining your maximum repayment period.
Choose your new repairer
After choosing which loans you want to consolidate and which you do not want to consolidate, you will be asked to choose a new Federal Student Loans Manager.
Here is a list of federal loan services and details about each from the Better Business Bureau:
Sign a new promissory note
Just like you did when you went to college, you will need to sign a promissory note, an agreement between you and the government that you will pay your debts.
Your direct consolidation request will include a hard credit inquiry, which means you may see a temporary drop in your credit score.
What are the disadvantages of consolidating my Perkins loans?
You need to consolidate your student loans into a direct loan to receive Biden’s $10,000 to $20,000 student loan forgiveness, but that might not be the best option for you.
Perkins loans – both federal and private – are canceled after five years of full-time work in the following occupations:
- Public or non-profit school teacher (some part-time teaching work is eligible for forgiveness)
- Nurse or medical technician
- Qualified professional provider of early intervention services for people with disabilities
- Faculty member of a tribal college or university
- Speech-language pathologist with a master’s degree working in a Title I eligible elementary or secondary school
- Librarian with a master’s degree working in a Title I eligible school
- Law enforcement officer or prison officer
- Lawyer employed in a federal public defense or community organization
- Employee of a public or private not-for-profit child or family services agency providing services to high-risk children and their families from low-income communities
- Staff member of the education component of a Head Start program
- Staff member of the education component of a state-licensed or regulated pre-K or child care program
- Military service in the United States Armed Forces in an area of hostile fire or imminent danger
- Cancellation of AmeriCorps VISTA or Peace Corps Volunteers
How do I decide whether or not to consolidate my Perkins loans?
Sonia Lewis, the student loan doctorsays: “There is a catch here. Most people who have taken out Perkins loans are eligible for cancellation after five years, whether they know it or not.”
If you work in one of the professions listed above, Lewis recommends checking how many payments you have left until cancellation. If you’re closer than you thought to total student loan forgiveness, it might be worth skipping consolidation and waiting for your Perkins loans to be wiped out.
If you don’t work in one of the above occupations and a $10,000 to $20,000 decrease in your student loan principal balance can significantly reduce your monthly payments or loan term, Lewis recommends to consolidate your private loans into direct loans.
In addition to the $10,000 to $20,000 discount from Biden’s plan, you’ll be eligible for the following federal protections:
- Access to income-driven repayment plans that can reduce your monthly payments if you run into financial difficulty
- Payment pauses, such as the pandemic payment pause
- Loan discharge if you die before repaying your student loan; private student loan debt is inherited by your next of kin
- Access to future rounds of student loan forgiveness, if applicable, and enhanced repayment programs