Janice Lozano
Federal Perkins Loans are low-interest, long-term loans that are funded by the U.S. Department of Education and serviced by universities to help needy undergraduate and graduate students pay for post-secondary education. The annual interest rate charged on the unpaid balance of the Federal Perkins Loan is 5%. The loan has a maximum ten-year repayment period, with a minimum monthly payment of $40. The length of repayment is determined by the total amount borrowed, the interest rate, and the repayment amount. Students can borrow up to $5,500 per award year, with an aggregate loan limit of $27,500, while graduate students may borrow up to $8,000 per award year, with an aggregate loan limit of $60,000.
| Characteristics | Values |
|---|---|
| Interest rate | 5% |
| Monthly repayment | $40 minimum |
| Repayment period | 10 years |
| Payment methods | Check, money order, credit card, ACH |
| Grace period | 9 months |
| Cancellation | Death, permanent and total disability, loan rehabilitation |
| Deferment | Yes, for specific services performed by the borrower |
| Forbearance | Yes, for economic hardship |
| Exit interview | Required upon completion of coursework or change in enrollment status |
| Billing service | Heartland Campus Solutions ECSI (OSU), SUNY Student Loan Service Center (SUNY) |
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Payment methods
Federal Perkins Loans are low-interest, long-term loans that are funded by the U.S. Department of Education and serviced by universities to help students pay for their education. The annual interest rate on these loans is 5%. The monthly repayment amount will include the principal and interest needed to repay the original loan amount and accruing interest over the life of the loan, provided that payments are received as scheduled.
- Check, money order, or ACH: Payments can be made by check or money order, and should be made payable to the SUNY Student Loan Service Center (SUNY SLSC). Be sure to enclose the top portion of your monthly billing statement or coupon with your remittance. Alternatively, you can set up an ACH (Automated Clearing House) to have your checking or savings account directly debited for the amount of your payment each month.
- Credit card: To make a payment by credit card, go to the Payment Options in the Borrower's section of the SUNY website.
- Automatic payments: You can set up automatic payments at Heartlandecsi.com. You can authorise the ECSI to deduct your payment directly from your bank account or MasterCard.
- Online: The U.S. Department of Education's National Student Loan Data System lists all loans for all students, and is available at nsldsfap.ed.gov.
- In-school deferment: If you are still enrolled at least half-time in a university, you can apply for deferment of repayment.
- Loan rehabilitation: If you have defaulted on your Federal Perkins Loan, you may rehabilitate your loan by requesting rehabilitation and making nine on-time monthly payments, as determined by the university. Once rehabilitation is completed, your account will be returned to current status, and the default will be removed from your credit history.
- Cancellation: If you become permanently and totally disabled, or in the event of your death, your loan will be canceled in full. You can also apply for a partial cancellation of your Perkins loan if you are a teacher in a shortage area (math, science, foreign language, or bilingual education).
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Grace periods
A grace period is an allotted amount of time during which you are not expected to make payments on your Federal Perkins Loan after initially leaving school or dropping below half-time status. There are two kinds of grace periods for Federal Perkins Loans: initial grace periods and post-deferment grace periods.
An initial grace period begins the day after the borrower drops below half-time enrollment. During this time, payments need not be made and interest will not accrue. When the grace period expires, principal and interest will begin to accrue, and your first payment will be due the next month. The grace period for Federal Perkins Loans is nine months.
A post-deferment grace period is the period of six consecutive months that immediately follows the end of a period of deferment and precedes the date on which the borrower must resume repayment on the loan. Neither the deferment nor the grace period is counted as part of the 10-year repayment period. After each deferment, the borrower is entitled to a post-deferment grace period of six consecutive months.
If you interrupt your initial grace period by returning to school, you must enroll in enough units to maintain at least half-time status in a qualifying course of study and file the appropriate student deferment form to be allotted another grace period.
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Loan cancellation
If you are a Perkins Loan holder and work in a public service position, you may be eligible for Perkins Loan forgiveness or cancellation. Depending on the type of public service job, you could have up to 100% of your Perkins Loans forgiven after five years.
Public service positions that qualify for Perkins Loan forgiveness include:
- Peace Corps and Action Program (including VISTA) volunteers
- Teachers in Low-Income Serving Schools, Teachers of Special Education, Teachers of Math, Science, Foreign Language, and Bilingual Education, and Teachers in Other Designated Shortage Areas
- Early Childhood Education Providers (Head Start or other Pre-kindergarten and Childcare programs licensed by a State)
- Certain Employees of Public or Non-Profit Private Child or Family Service Agencies
- Firefighters in Federal, State, or local fire departments and districts
- Speech pathologists or librarians with a master’s degree, working in a Title I eligible elementary or secondary school
- Attorneys employed in a federal public or community defender organization
- Members of the U.S. Armed Forces serving in hostile fire or imminent danger pay areas
Additionally, if you are a Perkins Loan borrower and become permanently and totally disabled, your loan can be canceled in full. Permanent and total disability means the inability to work and earn money due to an injury or illness that is expected to be long-term or result in death. In the unfortunate event of death, the loan will also be canceled upon receipt of a certified copy of the death certificate.
To apply for Perkins Loan forgiveness, contact your school's financial aid office or the loan servicer ECSI (Heartland ECSI) for a Perkins Loan cancellation application. You will need to provide proof of your qualifying public service employment. It is important to note that your school determines your eligibility, and there is no appeal process to the Department of Education.
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Loan rehabilitation
Federal Perkins Student Loan rehabilitation is a process that allows borrowers to get their defaulted loan out of default status. Rehabilitation is a one-time opportunity, and it is important to note that if a borrower defaults on the loan again after rehabilitation, they will not be able to rehabilitate it a second time.
To start the loan rehabilitation process, a borrower must request rehabilitation from their university or its contracted collection agencies. Once the request is made, the borrower must make nine consecutive, on-time monthly payments on their defaulted Perkins Loan. It is important to note that these payments must be made monthly, even if the borrower was on a quarterly or semi-annual repayment plan previously. There can be no gaps in the nine payments—if a payment is missed, the borrower must begin the nine-month streak again.
During the rehabilitation process, the borrower will regain eligibility for Title IV funds after six consecutive, on-time monthly payments. However, it is important to note that the loan is still considered to be in default until all nine payments are made.
If a borrower successfully rehabilitates their Federal Perkins Loan, they will again be subject to the original terms and conditions of their loan, including the benefits and privileges of the promissory note. The default status will be removed from their credit history.
It is important for borrowers to understand their rights and responsibilities regarding their Federal Perkins Loans. If a borrower is experiencing difficulty adhering to their repayment schedule, they should contact their university's student loan office for assistance. Additionally, borrowers can set up automatic payments to ensure timely payments.
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Deferment
In-School Deferment
You may be eligible for an in-school deferment if you are enrolled at least half-time in an eligible school. This includes graduate fellowship programs approved by the Department, such as a Fulbright grant outside the United States.
Military Service Deferment
If you are serving on active duty or performing qualifying National Guard duty in connection with a war, military operation, or national emergency, you may be eligible for a Military Service Deferment. This includes the College Cost Reduction and Access Act (CCRAA), which provides a 13-month deferment period for borrowers who are members of the National Guard or Armed Forces Reserve and retired members of the Armed Forces who were enrolled in a postsecondary school.
Graduate Fellowship Deferment
If you are enrolled and attending as a regular student in a graduate fellowship program approved by the Department, you may be eligible for a Graduate Fellowship Deferment.
Economic Hardship Deferment
You may be eligible for an Economic Hardship Deferment if you are experiencing financial hardship, such as earning a low income or receiving public assistance.
New Parent Deferment
For Perkins Loans made before July 1, 1993, you may be eligible for a six-month deferment as a new parent.
Teaching in Low-Income Schools Deferment
If you are teaching in a school serving students from low-income families, you may be eligible for a deferment. The school must be listed in the Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.
It is important to note that deferment is not the same as forbearance, during which interest continues to accrue. Schools may grant forbearance to borrowers experiencing financial hardship, poor health, or other acceptable reasons. Additionally, deferments may be granted for up to 12 months at a time, and the eligibility must be reaffirmed annually.
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Frequently asked questions
The interest rate on a Federal Perkins Loan is 5%.
The maximum repayment period for a Federal Perkins Loan is 10 years.
Yes, you may be eligible for a cancellation or partial cancellation of your Federal Perkins Loan. You can apply for a cancellation if you are permanently and totally disabled, or in the event of your death. You may also be eligible for a partial cancellation if you have served in the military or are teaching in a shortage area.
