Federal Perkins Loans

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 with a share contributed by the school. You must repay this loan to your school.

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).
•$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).

Is there a charge for this loan?

A Perkins Loan borrower is not charged any fees to take our the loan. However, 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 your failure to make payments persists, 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.

Will I have an opportunity to cancel my loan after I sign the promissory note?

Yes. Your school must notify you in writing whenever it credits your account with your Perkins Loan funds. This notification must be sent to you 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 that you wish to do so 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.

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 may have longer than nine months if you are on active duty with the military). This 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.

Can I postpone repayment of my Federal Perkins Loan?

Yes. Under certain conditions, you can receive a deferment or forbearance on your loan. During a deferment, you are allowed to temporarily postpone payments on your loan, and no interest accrues.

Deferments are not automatic. You must apply for one through your school 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 are temporarily unable to meet your repayment schedule but are not 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; you are responsible for it.

Forbearance isn't automatic either. You may be granted forbearance in up to 12-month intervals for up to three years. You must apply in writing for forbearance through the school that made your loan or the agency the school employs to service your loan. You'll have to provide documentation to support your request for forbearance. You must continue making scheduled payments until you are notified that deferment or forbearance has been granted.

Can my Federal Perkins Loan be canceled?

Yes. The loan can be canceled if the borrower dies or becomes totally and permanently disabled. A loan can also qualify for cancellation under certain other conditions-as long as the borrower is 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. If you think you qualify, contact your recruiting officer.

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.

SOURCE: "The Student Guide: Financial Aid From the U.S. Department of Education 2002-2003."

© 2002 The Washington Post Company