Federal Perkins Loan

Federal Perkins Loans are low-interest loans that the student takes out and the student repays. These loans are subsidized so they do not accrue interest while a student is in school or during the nine months after they leave school (grace period).

Unless Congress takes action, the authorization for the Federal Perkins Loan program is set to expire on October 1, 2017. If a student receives a loan disbursement in August or September for the autumn 2017 term they will also receive their scheduled spring disbursement.

Federal Perkins Loan Details

To be awarded the Federal Perkins Loan, a student must have a low EFC and substantial unmet need after all other aid and loans (excluding the parent Federal Direct PLUS Loan) are awarded.

Students awarded the Federal Perkins Loan for the 17-18 academic year cease to be eligible for the loan if the fall disubrsement is not made by September 30, 2017. The loan can only be disbursed if the required entrance counseling and MPN have been submitted to Student Accounts in Business Services.

Graduate students are not currently eligible for the Federal Perkins Loan.

The interest rate on the Federal Perkins Loan is a fixed 5% for the life of the loan. No origination fee is charged, so if a student borrows $1000, they receive $1000 and owe back $1000.

A student who borrows $5,000 at an interest rate of 5% and uses the standard repayment schedule (120 equal payments) will have monthly payments of $53. When the loan is paid in full after 10 years they will have paid a total of $6,364.

To receive a customized loan repayment schedule a student can access the US Department of Education's Repayment Estimator or the loan calculators at finaid.org.

Students must complete both an entrance counseling session and a paper promissory note. Both can be done by contacting Business Services in Griz Central.

Generally, a Federal Direct Perkins Loan will be for the full academic year, the money being disbursed in two payments, half each term.

When the funds are disbursed they are used to pay the balance owed to the school first. If there are excess funds they will be paid to the borrower as a refund to help cover educational expenses not charged by UM.

Repayment of Federal Perkins Loans begins nine months after a student ceases to be enrolled at least half-time (6 credits). This nine month period of time is known as a grace period.

If a student begins attending before the full nine months has transpired, then when they cease enrollment again, they will have a full grace period.

If a student begins repayment on their student loans and then returns to school at least half-time, their existing loans will go into deferment (payment suspended). However, when they cease enrollment again, repayment will begin immediately as they have already used the grace period on those loans. Any new loans borrowed will have a grace period.

The standard repayment plan requires that the student pay a minimum of $40 a month and have the loan paid off in ten years.The Federal Perkins Loans is repaid to UM.

Students who are having difficulty making payments should contact Business Services as there are many options available to prevent a student from going into default on their loan.

These loans may be consolidated with a student's Federal Direct Student Loans. UM's Financial Education Program is available to assist students with loan repayment issues.

A percentage of a student's Federal Perkins Loan can be forgiven/cancelled each year that a student meets certain conditions. In most circumstances the loan will be fully discharged in 5 years.

The Federal Perkins Loan can be discharged for:

  • Teaching full-time in a low income school
  • Working full-time in the Peace Corp or VISTA
  • Working full-time in law enforcement
  • Working full-time as a nurse or medical technician

For an exhaustive list of cancellation conditions a student should contact the Perkins Loan Administrator in Business Services.

Information about a student's loan is submitted to the National Student Loan Data System (NSLDS). Schools, lenders, servicers and guarantors authorized by the US Department of Education have access to the information in NSLDS.

Students and parent borrowers can also access the information recorded in NSLDS using their FSA ID.