The College Perkins Loan Crisis, Part 2

In our last story, we took a look at a report that detailed a financial crisis being faced by those who utilize federal Perkins loans to pay for college.

Thanks to the current state of the economy, this need-based loan (reserved for students with some form of financial ‘need’) is being defaulted upon in record numbers, which could lead to fewer available funds for those who will rely on the Perkins loan in the future.

However, the most serious danger may lie in the post-college world for Perkins borrowers who enter delinquency on their loan.

Read on to better understand the specific hazards of the Perkins loan collections process, and to learn some better strategies to aid your family in college financial planning.

– Scott


Although the funds for Perkins loans come from the federal government (via the taxpayer), the loan is administered by the universities themselves.

Thus, it is the colleges that must pursue litigation to collect on defaulted loans.

Since the funds come from taxpayer money and provide for future Perkins loans, colleges are required by law to recover the loans.

Most schools will try to work with individuals to develop a payment plan and will attempt to collect delinquent funds by utilizing their own collection personnel. But generally, after 120 days in default, the loans are referred to a collections agency.

Many Perkins borrowers who are unable to pay back their loan are faced with the prospect of being sued by their own schools, which leads to even more debt for already struggling graduates.


Perkins loans are capped at $5,500 per year for undergrads and at $8,000 per year for graduate students.

Because they are relatively small and offer less incentive than other loans for commission-based collections agencies to pursue them, universities are allowed to charge higher collections fees to pursue delinquent Perkins borrowers.

On the first attempt at collection, borrowers can be charged 30% of the loan principal on top of interest and late fees. On the second attempt schools can charge 40% plus an additional 40% upon litigation.

Furthermore, graduates with Perkins loans aren’t eligible for the income-based repayment plans that are available for Stafford loan borrowers to ease their burden when they face financial difficulties.

The Education Department stresses that students will be required to repay their loans no matter their education outcome or their “subsequent employment or lack thereof.” Therefore, taking on a Perkins loan in the current economic climate is somewhat high-risk and can potentially lead to a lifetime of debt.

Your best course of action in collegiate financial planning is to educate yourself on all of the options available to your family to help you pay for college. The “Free Reports” section on outlines numerous options to help you get in to the college of your dreams, as well as to pay for it.

In order to protect your family from the prospect of lifelong debt, it is absolutely essential that you examine all possible college funding paths that are available for your unique situation.

College Made Simple offers an incredible personalized free college funding analysis with a professional Education Consultant that could help you maximize your family’s financial aid eligibility, lower your Expected Family Contribution (EFC), design a plan to more easily afford to send your children to college… and give you strategies to help your child get accepted into their college of choice.

Research and planning are the best tools available for facing the quagmire of post-secondary admissions and financing a college education. Arm yourself with knowledge.

To your college funding & admissions success,

Scott Weingold

Co-Founder, College Planning Network LLC
Publisher, – The free educational resource of College Planning Network


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Editor's Note: Scott Weingold has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by  He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple" which reveals insider’s tips, methods, and strategies for beating the high cost of college.

Scott is the co-founder and a principal of the widely renown College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!” He's been featured or mentioned in The Philadelphia Inquirer, Yahoo News,, Voice America with Ron Adams, Crains Cleveland Business, and on Cleveland Connection with James McIntyre.  Scott has published numerous articles and is a professional speaker who has addressed thousands of audiences online and offline throughout the United States.  His actionable insights and candid, open approach have earned him & his team numerous media interviews, citations, and speaking opportunities, and his free online video workshop is one of the Internet’s most widely viewed pieces in the college funding space.