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- Biden’s student-loan forgiveness policy does not cover Perkins loans which are not held by the US Government.
- Consolidating your loans into Direct loans is necessary to qualify for forgiveness up to $20,000
- It may not be the best choice for everyone as some Perkins loans can be forgiven after five year.
You might be denied President Biden’s opportunity to attend if you have private-held Perkins loan loans Student-loan forgiveness of $10,000If you were awarded a Pell Grant, it will cost you $20,000
Contrary to federal student loans, Perkins loans can be serviced only by the school where you went, while the federal government pays interest. Schools can no longer offer this type of Perkins loan after the Perkins loan program ended September 30, 2017.
Biden’s new student loan forgiveness is available only to student loans that have been serviced by the federal government. Therefore, your Perkins loan may not be eligible. You have federally-held Perkins loans if your Perkins loans are serviced by the following servicers:
- FedLoan Servicing – PHEAA
- Great Lakes Education Loan Services, Inc.
- Edfinancial
- MOHELA
- Assistance
- Nelnet
- OSLA Servicing
- ESCI
- Default Resolution Group
You can get up to $20,000 student-loan forgiveness on your private Perkins loan. However, consolidation into a Direct loan is required. Here’s how it works.
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How to fill out a consolidation loan application
Fill out a direct loan consolidation application as a first step. studentaid.gov. To start the application you will need to log in. However, you can also use a read-only or demo application to prepare for the real application.
You’ll need to provide:
- Your full name and any former names
- Your Social Security number
- Your date of birth
- Your permanent address
- Your telephone number
- Your email address
- Your employer’s name, address, and phone number
You’ll also need to provide two references — two adults who live in the US who do not live with you, and who have known you for at least three years. You’ll need to provide the following information about your references:
- Phone number
- Email address
- Mailing address
After filling out your information and providing references, the next section in the application is titled Loans I want to consolidate. Here’s what this part of the application will look like:
studentaid.gov
Only consolidate loans that are not Direct loans.
Once you’ve finished with that section, you’ll fill out the next section, titled Loans I don’t want to consolidate. You’ll list any other student loans you want the federal government to consider when deciding your maximum repayment period.
Choose your new servicer
After choosing the loans you do and don’t want to consolidate, you’ll be asked to choose a new federal student loan servicer.
Here’s a list of federal loan servicers, and details about each one from the Better Business Bureau:
Sign a new promissory note
Just like you did when you went to college, you’ll have to sign a promissory note, an agreement between you and the government stating that you will pay your debts.
Your Direct consolidation application will include a hard credit inquiry, which means you might see a temporary drop in your credit score.
What are the cons 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 it may not be the best option for you.
Perkins loans — both federally-held and privately-held — are forgiven after five years of full-time work in the following professions:
- Teacher at a publicOr nonprofit school (some part-time teaching work qualifies for forgiveness)
- Medical technician or nurse
- Professional provider of early intervention services to the disabled
- Faculty member of a tribal college/university
- A speech pathologist with a master’s in speech therapy working in Title I-eligible elementary and secondary schools
- Librarian with a Master’s Degree working in a Title I school
- Corrections officer or law enforcement
- Federal public or community defender agency attorney
- An employee of a private or public nonprofit child- and family-services agency that provides services to high-risk families from low-income neighborhoods.
- Head Start education staff member
- A staff member working in the education section of a preK or childcare program licensed or regulated under the state
- The US military forces offer military service in hostile fire and areas of imminent danger to the troops
- AmeriCorps VISTA or Peace Corps volunteer cancellation
How do I decide if I should consolidate my Perkins loan?
Sonia Lewis, The Student Loan DoctorAccording to, “There is a catch-22.” Most Perkins loan holders are eligible for cancellation within five years.
Lewis recommends that you verify how many payments remain until cancellation if your profession is one of those listed above. It might be worth waiting for your Perkins loans and consolidating if you are closer to total student loan forgiveness than you thought.
Lewis recommends that private student loans be consolidated into Direct loans for those who don’t work in the above mentioned fields.
Additional to the forgiveness of $10,000-$20,000 from Biden’s Plan, you will be eligible to receive the following federal protections.
- You can get income-driven payment plans that will lower your monthly payments in the event of financial hardship.
- Payment pauses like the pandemic payment freeze
- If you die before paying off your student loans, your next-of-kin can discharge your loan. Private student loan debts are inherited by your next of the kin.
- Access to future rounds, if applicable, of student-loan forgiveness and improved repayment programs
