Q & A About Perkins Loans

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 may 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?

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.

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.

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.

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). 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.

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 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, 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. 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 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 toll-free 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 the loan. Only that school may grant deferment, forbearance or cancella­tion, or make other decisions concern­ing your loan.