What is a Federal Perkins Loan?
A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate
and graduate students with financial need. Your school is your lender. The loan
is made with government funds, and your school contributes a share. You must repay
this loan to your school.
How much can I borrow?
Depending on when you apply, your level of need, and the school’s funding level,
you can borrow up to
- $4,000 for each year of undergraduate study (the total amount you can borrow as
an undergraduate is $20,000).
- $6,000 for each year of graduate or professional study (the total amount you can
borrow as a graduate/ professional student is $40,000, including any Federal Perkins
Loans you borrowed as an undergraduate)
Other than interest, is there any charge to get these loans?
No, you’re not charged any fees to take out the loan. But, if you skip a payment,
make a payment late, or make less than a full payment, you might have to pay a late
charge. If you continue not making payments as required, you might have to pay collection
costs as well.
How will I be paid?
Your school will either pay you directly (usually by check) or credit your account.
Generally, you’ll receive the loan in at least two payments during the
academic year.
Can I cancel the loan if I change my mind, even if I’ve signed the
promissory note agreeing to the loan’s terms?
Yes. Your school must notify you in writing whenever it credits your account with
your Perkins Loan funds. The school must send you this notification no earlier than
30 days before, and no later than 30 days after, the school credits your account.
You may cancel all or a portion of your loan if you inform your school you wish
to do so within 14 days after the date your school sends you this notice, or by
the first day of the payment period, whichever is later. (Your school can tell you
the first day of your payment period.) If you receive Perkins Loan funds directly
by check, you may refuse the funds by returning the check.
When do I pay back this loan?(1)
If you’re attending school at least
half time, you have nine months after you graduate, leave school, or drop
below half time status
before you must begin repayment (you might have longer than nine months if you’re
on active duty with the military). This period of time is called a grace period.
If you’re attending less than
half time, check with your financial aid administrator to determine your
grace period. At the end of your grace period, you must begin repaying your loan.
You may be allowed up to 10 years to repay.
Examples of Typical Payments for Perkins Loan Repayment:
Total Loan Amount
$4,000
$5,000
$15,000
Number of Payments
120
120
120
Monthly Payment
$42.43
$53.03
$159.10
Total Interest Charges
$1,091.01
$1,364.03
$4,091.73
Total Charges
$5,091.01
$6,364.03
$19,091.73
(1) The U.S. Department of Education (ED) has issued special guidance for those
called to active duty as a result of the September 11, 2001 terrorist attacks. If
a borrower’s loans are in an in-school status, in-school deferment status, or in
a grace period when the borrower is ordered to active duty or reassigned, the loan
holder must maintain the loans in that status during the period of the borrower’s
active duty service or reassignment, plus the time necessary for the borrower to
resume enrollment in the next regular enrollment period reasonably available to
the borrower. The maintenance of loan status may not exceed a total of three years,
including the period of time necessary for the borrower to resume enrollment.
For a borrower whose loans are in repayment, the loan holder must grant a forbearance
(temporary suspension of repayment) for the expected period of the borrower’s active
duty status, beginning on the first day of active duty, not to exceed one year.
Forbearance beyond the initial period will require supporting documentation and
a written agreement by the borrower.
For more information about loan repayment options that might be available to a borrower
in this situation, the loan holder should be contacted directly.
How much will I have to repay each month?
Your monthly payment amount will depend on the size of your debt and the length
of your repayment period. The table at left shows typical monthly payments and total
interest charges for three different 5-percent loans over a 10-year period.
Are there any tax credits available for paying back these loans?
Yes, there are tax incentives for certain higher education expenses, including a
deduction for student loan interest for certain borrowers. This benefit applies
to federal and nonfederal loans used to pay for postsecondary education costs. The
maximum deduction is $2,500 a year. IRS Publication 970, Tax Benefits for Higher
Education, explains these credits and other tax benefits. You can find out more
by calling the IRS at 1-800-829-1040. TTY callers can call 1-800-829-4059.
Is it ever possible to postpone repayment of my Federal Perkins Loan?
Yes, under certain conditions, you can receive a "deferment" or "forbearance" on
your loan, as long as the loan isn’t in
default. During a deferment, you’re allowed to temporarily postpone payments,
and no interest accrues (accumulates). Look under "Perkins Loans" on the
Loan Deferment Summary Chart for the list of deferments available. Also,
the school that made you your loan must automatically defer your Federal Perkins
Loan(s) during any periods where you perform a service that qualifies you for loan
cancellation. (See below for a description of loan cancellation; see the next page
for a list of service cancellations.) Deferments are not automatic. You must apply
for one through your school, generally by using a deferment request form your school
can give you. You must file your deferment request on time or you’ll pay a late
charge. For more details on deferments, contact your school’s financial aid office.
If you are temporarily unable to meet your repayment schedule but aren’t eligible
for a deferment, you can receive forbearance for a limited and specific period.
During forbearance, your payments are postponed or reduced, or your repayment period
might be extended. Interest continues to accrue, however, and you’re responsible
for paying it. Forbearance isn’t automatic either. You may be granted forbearance
in intervals of up to 12 months at a time for up to 3 years. You must apply in writing
for forbearance to the school that made your loan or to the agency the school employs
to service your loan. You’ll have to provide documentation to show why you should
be granted forbearance. You must continue making scheduled payments until you’re
notified that deferment or forbearance has been granted. Otherwise, you could become
delinquent or go into default.
Is it ever possible to have my Federal Perkins Loan canceled?
Yes. Federal Perkins Loans can be canceled if the borrower dies or becomes totally
and permanently disabled, for example. A loan can also qualify for cancellation
under certain other conditions, as long as you’re not in
default. See the table below for the list of cancellation provisions. For
more information, contact your financial aid office. If you serve as an enlisted
person in certain specialties of the Armed Forces, the U.S. Department of Defense
might, as an enlistment incentive, repay a portion of your student loan. Note that
this is not a cancellation. For more information, contact your recruiting officer.
Another type of repayment assistance (again, not a cancellation) is available through
the U.S. Department of Health and Human Services’ Nursing Education Loan Repayment
Program (NELRP). This program will help repay student loans for registered nurses
in exchange for their service in eligible facilities located in areas experiencing
a shortage of nurses. All NELRP participants must enter into a contract agreeing
to provide full-time employment in an approved eligible health facility (EHF) for
2 or 3 years. In return, the NELRP will pay 60 percent of the participant’s total
qualifying loan balance for two years or 85 percent of the participant’s total qualifying
loan balance for three years. For more information, call NELRP, toll-free, at 1-866-813-3753
or visit
www.bhpr.hrsa.gov/nursing/loanrepay.htm. If you have any questions about
the terms of your Federal Perkins Loan, repayment obligations, deferment, forbearance,
or cancellation, check with the school that made you the loan. Only that school
may grant deferment, forbearance, or cancellation, or make other decisions concerning
your loan.
Federal Perkins Loan Discharge/Cancellation Summary
|
Cancellation Conditions
|
Amount Forgiven
|
Notes
|
|
Borrower's total and permanent disability or death
|
100%
|
Service qualifies for deferment also.
|
|
Full-time teacher in a designated elementary or secondary school serving students
from low-income families
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Full-time special education teacher (includes teaching children with disabilities
in a public or other nonprofit elementary or secondary school)
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Full-time qualified professional provider of early intervention services for the
disabled
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Full-time teacher of math, science, foreign languages, bilingual education, or in
other fields designated as teacher shortage areas
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Full-time employee of a public or non-profit child- or family-services agency providing
services to high-risk children and their families from low-income communities
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Full-time nurse or medical technician
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Service as a full-time law enforcement or corrections officer
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Full-time staff member in the education component of a Head Start Program
|
Up to 100%
|
Service qualifies for deferment also.
|
|
Vista or Peace Corps volunteer
|
Up to 70%
|
Service qualifies for deferment also.
|
|
Service in the U.S. Armed Forces
|
Up to 50% in areas of hostilities or imminent danger
|
Service qualifies for deferment also.
|
|
Bankruptcy (in rare cases)
|
Up to 100%
|
Cancellation is possible only if the bankruptcy court rules that repayment would
cause undue hardship.
|
|
Closed school (before student could complete program of study)
|
100%
|
For loans received on or after January 1, 1986.
|
1. As of October 7, 1998, all Perkins Loan borrowers are eligible for all cancellation
benefits regardless of when the loan was made or the terms of the borrower’s
promissory note. However, this benefit is not retroactive to services performed
before October 7, 1998.
2. Beginning July 1, 2002, a borrower who is determined to be totally and permanently
disabled will have his or her loan placed in a conditional discharge period for
three years from the date the borrower became totally and permanently disabled.
During this conditional period, the borrower doesn’t have to pay principal or interest.
If the borrower continues to meet the total-and-permanent disability requirements
during, and at the end of, the three-year conditional period, the borrower’s obligation
to repay the loan is canceled. If the borrower doesn’t continue to meet the cancellation
requirements, the borrower must resume payment. Total and permanent disability is
defined as the inability to work and earn money because of an injury or illness
that is expected to continue indefinitely or to result in death. For more information
on qualifying for this discharge, review your
promissory note and contact your loan holder. More information on teaching
service cancellation/deferment options can be found at
www.studentaid.ed.gov At the site, click on "Repaying," then on "Cancellation
and Deferment Options for Teachers.
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