This study used data from the 1996 National Postsecondary Student Aid Study to compare the demographic characteristics, income levels, educational costs, and financial need levels of Perkins loan and Stafford loan borrowers in academic year 1995-96. Major findings indicated the following: nearly 63 percent of undergraduate Perkins loan borrowers came from families with annual incomes of less than $30,000; the mean family income of Perkins borrowers was $33,566, versus $37,220 for subsidized loan borrowers and $61,714 for unsubsidized loan recipients; and 60 percent of undergraduates who received Perkins loans were also awarded Pell grants, compared to 51 percent of subsidized loan and 33 percent of unsubsidized loan borrowers. Results suggest that if funding for Perkins loans were further reduced or eliminated, many borrowers would have to replace Perkins loan funds with higher cost unsubsidized loans. Two major concerns with the Perkins loan program were identified. First, recent program changes, such as declines in program appropriations and increases in institutional matching fund requirements, may have caused the number of participating institutions to decline dramatically. Second, from 1994 to 1997, the number of Perkins loans in default has increased by 19 percent, at a time when Stafford subsidized loans have declined sharply. (DB)