Lana Oconnell
The Federal Perkins Loan is a serious legal agreement that requires repayment even if you do not graduate, fail to get a job, or your education did not meet your expectations. The interest rate on these loans is 5%, and monthly repayments include both the principal and interest accrued over the life of the loan. There is an initial grace period of nine months, during which no payments are due and interest does not accrue. After this period, interest begins to accrue, and the first payment is due three months later. Repayments can be made by check, money order, credit card, or ACH. It is important to note that failure to make scheduled payments without contacting the loan office may result in the loan being declared in default, with potential consequences for your credit history.
| Characteristics | Values |
|---|---|
| Interest rate | 5% |
| Monthly repayment | Includes principal and interest needed to repay the original loan amount |
| Repayment due date | 15th of the month |
| Grace period | 9 months |
| Deferment | Available |
| Forbearance | Available |
| Loan cancellation | Available in the event of permanent and total disability or death |
| Loan rehabilitation | Available |
| Loan repayment assistance | Available for service in the U.S. Army, Army Reserves, or Army National Guard |
| Loan limit | $5,500 per award year for undergraduates, $8,000 per award year for graduates/professionals, $11,000 for non-undergraduates and non-graduates |
| Exit counseling | Required |
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Exit counselling
Firstly, you will need to complete an Exit Interview Questionnaire and a Repayment Agreement. If you signed your Perkins promissory note electronically, you can complete the exit interview process online. This is an important step to understand your loan and your repayment obligations. The interview will cover the terms of your loan, your repayment schedule, and your rights and responsibilities. It is important to keep a record of all correspondence, including the confirmation email you will receive after the interview.
During the exit counselling process, you will be informed of the interest rate on your loan, which is 5%. Your monthly repayment amount will include this interest, as well as the principal amount, and it is important to make these payments on time to build a good credit history. You will also be informed of the different payment methods available to you, which include check, money order, credit card, or ACH (Automated Clearing House) debit.
Additionally, you will need to keep the loan provider informed of any changes to your name or address. It is also important to note that your loan account number should be included in all correspondence to ensure proper record-keeping and timely responses.
Finally, you may be eligible for deferment of repayment if you are still enrolled as a regular student, or you may wish to explore loan repayment programs offered by the U.S. Army for service in the Army, Army Reserves, or Army National Guard.
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Grace periods
Initial grace periods begin the day after the borrower drops below half-time enrollment. The Federal Perkins Loan has a nine-month grace period, which means that you will not be expected to make your first payment until the end of the first quarter of the billing cycle. For example, if your grace period ends in December, your first payment will be due in March. It is important to note that if you go back to school or enroll in enough units to maintain at least half-time status during the grace period, you will be allotted another nine-month grace period.
Post-deferment grace periods refer to the period of six consecutive months that immediately follows the end of a deferment period. Deferment can be granted for various reasons, such as economic hardship or unemployment. The six-month grace period is not counted as part of the 10-year repayment period. It is important to note that if you allow the entire nine-month grace period to expire and then return to school, you will be awarded another six-month grace period at the time you exit.
It is important to understand the terms and conditions of your Federal Perkins Loan, as grace periods vary depending on the type of loan. While Federal Perkins Loans offer grace periods, other loans, such as Stafford, Direct, and Perkins Loans, do not provide grace periods at the conclusion of a forbearance period.
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Loan cancellation
- Teachers in low-income 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 state-licensed pre-kindergarten and childcare programs)
- Peace Corps and Action Program (including VISTA) volunteers
- Firefighters in federal, state, or local fire departments and districts
- Members of the U.S. Armed Forces serving in areas of hostility or imminent danger pay areas
- Attorneys employed in federal public or community defender organizations
- Child or family services workers providing services to high-risk children and their families from low-income communities
- Speech pathologists or librarians with a master's degree working in Title I-eligible elementary or secondary schools
To apply for loan cancellation, contact the school you attended when you received the Perkins Loan or their designated Perkins Loan servicer. You will need to submit a written request for cancellation and any required documentation of your eligibility. The school will determine your eligibility, and there is no appeal process to the Department of Education. It's important to note that you must keep the school informed of any changes in your name or address during the process.
Additionally, the U.S. Army offers a loan repayment program for Perkins Loan borrowers who serve in the Army, Army Reserves, or Army National Guard. You can contact your local military recruiting office for more information.
Depending on the type of public service job you have, you may be eligible for up to 100% cancellation of your Perkins Loan over a four or five-year period. For most jobs, 15% of your loan would be canceled in the first and second years, 20% in the third and fourth years, and the remaining 30% in the fifth year. It's important to note that Perkins Loan public service and employment-based cancellations are not considered income for tax purposes.
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Loan deferment
- In-school deferment: If you are enrolled at least half-time in an eligible school, you may be able to defer repayment of your Perkins Loan. This includes graduate fellowship programs approved by the Department of Education, 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, Armed Forces Reserve, or retired status after completing their active duty service.
- Economic hardship deferment: If you are experiencing financial difficulties, such as receiving public assistance or having a low income, you may qualify for an economic hardship deferment.
- Unemployment deferment: You may be able to defer your loan payments if you are unemployed and seeking full-time employment.
- Graduate fellowship deferment: If you are enrolled in a graduate fellowship program, you may be eligible for a deferment.
- Rehabilitation training program deferment: If you are participating in a rehabilitation training program, you may qualify for a deferment.
- New parent deferment: For Perkins Loans made before July 1, 1993, new parents may be eligible for up to six months of deferment.
It is important to note that the deferment process is optional and may require additional documentation or annual eligibility reaffirmation. During the deferment period, your school must accurately report your loan status, and you must continue to make payments on your loan if you are not in a qualifying deferment category. Additionally, the interest on your Federal Perkins Loan, which is typically 5%, continues to accrue during any period of deferment, which will increase the total amount you owe over the life of the loan.
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Repayment methods
General Methods
- Billing Statements: The loan provider will send you a billing statement before the first scheduled payment is due. Payments can typically be made by check, money order, credit card, or ACH (Automated Clearing House), which directly debits your checking or savings account.
- Grace Periods: Federal Perkins Loans typically offer an initial grace period of nine months after graduating, transferring, taking time off school, or falling below half-time enrollment. During this time, principal payments and interest accrual are usually suspended. Interest begins to accrue after the grace period, and the first payment is typically due the following month.
- Deferment and Forbearance: You may be eligible for deferment, which allows you to postpone loan payments under certain conditions without accruing interest. Forbearance is similar, but interest continues to accrue during the period. Properly applying for these benefits is essential to avoid loan default.
- Exit Counseling: Institutions like Drury University offer exit counseling to provide borrowers with the information they need to manage their loan repayment successfully. This includes explaining rights, obligations, repayment schedules, and deferment options.
Specific Institution Procedures
SUNY Student Loan Service Center (SLSC):
- Correspondence and Payments: All correspondence and loan payments must be directed to the SUNY SLSC, especially if you are no longer attending the SUNY campus that granted the loan.
- Loan Account Numbers: Always include your unique 9-digit loan account number, starting with 898, in all correspondence with the SUNY SLSC to ensure proper identification and timely responses.
- Exit Interview and Repayment Agreement: Before leaving the SUNY campus, borrowers must complete an Exit Interview Questionnaire and a Repayment Agreement. This can often be done online if the Perkins promissory note was signed electronically.
Oregon State University (OSU):
- Disputing Terms: You can dispute the terms of your Federal Perkins Loan by writing to the OSU Business Affairs/Student Loan Office. If unresolved, you may seek assistance from the Department of Education's Student Loan Ombudsman.
- Automatic Payments: OSU offers the option to set up automatic payments through Heartlandecsi.com. You can authorize ECSI to deduct payments directly from your bank account or MasterCard, ensuring consistent and timely payments.
- Loan Rehabilitation: If you default on your Federal Perkins Loan, you may rehabilitate it by requesting rehabilitation and making timely monthly payments for nine consecutive months as determined by OSU. Successful rehabilitation restores the original terms and removes the default from your credit history.
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Frequently asked questions
The interest rate on a Federal Perkins Loan is 5%.
Payments can be made by check, money order, credit card or ACH.
If you are experiencing difficulty adhering to your Perkins loan repayment schedule, you should contact the Student Loan Office. If you do not contact the Student Loan Office, your loan may be referred to a collection agency and will be reported to a national credit bureau as a defaulted loan.
The grace period is a period of nine months where principal payments are not due and interest is not accruing against the loan. The grace period begins after a student graduates, transfers, takes time off school, or falls below half-time enrollment.
The U.S. Army offers a loan repayment program for borrowers of Perkins or Direct Student Loans for service in the U.S. Army, Army Reserves, or Army National Guard.
