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).
Unfortunately Congress has allowed authorization for the Federal Perkins Loan program to expire. Effective July 1, 2018, Federal Perkins Loan funds can no longer be offered to students. Students with existing loans will be allowed to repay the loans under the original terms they agreed to when signing their promissory notes.
Federal Perkins Loan Details
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.
Sample Loan Repayment Schedule
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.
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.
National Student Loan Data System (NSLDS)
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.