A federal Perkins loans, or Perkins Loans, are need-based student loans offered by the U.S. Department of Education to assist American college students in funding their post-secondary education. The program is named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.

Perkins Loans carry a fixed interest rate of 5% for the duration of the ten-year repayment period. The Perkins Loans Program has a nine-month grace period, so that borrowers begin repayment in the tenth month upon graduating, falling below half-time status, or withdrawing from their college or university. Because the Perkins Loans is subsidized by the government, interest does not begin to accrue until the borrower begins to repay the loan. The loan limits for undergraduates are $4,000 per year with a lifetime maximum loan of $20,000. For graduate students, the limit is $6,000 per year with a lifetime limit of $40,000 (including undergraduate loans).

Perkins Loans are eligible for Federal Loan Cancellation for teachers in designated low-income schools, as well as for teachers in designated teacher shortage areas such as math, science, and bilingual education. A percentage of the loan is cancelled for each year spent teaching full-time.

Loan guarantee

A loan guarantee is a promise by a government to assume a private debt obligation if the borrower defaults. Most loan guarantee programs are established to correct perceived market failures by which small borrowers, regardless of creditworthiness, lack access to the credit resources available to large borrowers.

Loan guarantees can also be extended to large borrowers for political reasons. For example, Chrysler Corporation, one of the "big three" US automobile manufacturers, obtained a loan guarantee in 1979 amid lobbying by labor interests.

Programs and agencies

United Kingdom

• Small Firms Loan Guarantee

United States

• Fannie Mae
• Export-Import Bank
• Federal Family Education Loan Program
• Freddie Mac
• Government National Mortgage Association
• Small Business Administration
• VA loan