Federal Perkins Loan Information

Summary

• This loan is available to students with high financial need as based on the FAFSA information and the cost of attendance. 
• The interest rate is 5%.
• The loan has a nine-month grace period (no payment required) before payments are started.
• Students may be awarded up to $4,000 per year.
• Students must be enrolled in 12 or more credits per term to be eligible for this loan.
• Once the student accepts the loan on the Financial Aid Award Notification, the University Receivables Office will mail a promissory note prior to the start of fall semester to all new borrowers.
• Borrowers must complete the master promissory note.
• Funds will not be released until the promissory note is signed and returned to the University Receivables Office. 
• For more information on the Federal Perkins Loan Program see below (this also includes information about cancellation provisions).

(The following was taken from "The Student Guide" prepared by the U.S. Department of Education.)

Perkins Loan Frequently Asked Questions

What is a Federal Perkins Loan?

A Federal Perkins Loan is a low-interest (5 percent) loan for undergraduate 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, not to us (the federal government).

How much can I borrow?

Depending on when you apply, your level of need, and the funding level of the school, 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).

Other than interest, is there a charge for this loan?

A fee is involved for Direct and FFEL Stafford Loans but not for a Federal Perkins Loan.  But after you start to repay, 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 will 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?

You may cancel all or a portion of your loan if you inform your school within 14 days after the date that 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 to the school.

When do I pay back this loan?

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 (those on active duty with the military might have longer than nine months). 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.

Military personnel called to active duty will have additional options to postpone repayment.  The school that made the loan should be contacted for more information.

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 chart below shows typical monthly payments and total interest charges for three different 5-percent loans over a 10-year period.

Are there any tax incentives 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 all 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 at www.irs.gov or 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 your loan isn't in default.  During a deferment, you're allowed to temporarily postpone payments, and no interest accrues (accumulates).  Look at the "Notes" section in the chart below for the list of deferments available.

The school that made your loan must defer your Federal Perkins Loan(s) during periods where you perform a service that qualifies you for loan cancellation.  (See below for the list of deferments available.

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 financial aid office.

If you temporarily can't 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. Interest continues to accrue, however, and you're responsible for paying it.

Forbearance is not 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 for forbearance to the school that made your loan or 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 discharged (canceled)?

Yes. Federal Perkins Loans can be cancelled if the borrower dies or becomes totally and permanently disabled. A loan can also qualify for cancellation under 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 have any questions about the terms of your Federal Perkins Loan, check with the school that made the loan. Only that school may grant deferment, forbearance, or cancellation, or make other decisions concerning your loan.

(Taken from "The Student Guide" prepared by the U.S. Department of Education.)