Federal Perkins Loan Program (NDSL)
Change of Status | Prepayment | Interest Rate | Grace Period | Student Loan Ombudsman | Repayment of Loan | Military Deployment | Deferment | Hardship Repayment Options | Forbearance | Cancellations | Death or Disability | Penalties | Collection Agents, Litigation, and Witholding of Services | Loan Rehabilitation | Additional Information
Change of Status
Student Loan Ombudsman
The total amount of the loan received under this program, plus accrued interest, must be repaid within a ten-year period which begins immediately after the grace period expires. If you cease to be a half-time student, but re-enter the same or another accredited school as at least a half-time student within the applicable grace period, the grace period is not considered to have begun (i.e., the repayment period does not begin until you have been away from an eligible course of study continuously for the full duration of the grace period).
During the repayment period, your monthly payment amount will be a minimum of $40 in principal and interest according to your repayment schedule. If the amount you borrowed is greater than $4800.00 your monthly payment amount will be larger.
If your loan is in an in-school status or grace period when your are called to active duty or reassigned, your status will be maintained as in-school during the period of active duty, plus the time necessary for you to resume enrollment in the next regular enrollment period that is reasonably available. This status may not exceed three years including the time period necessary for you to resume enrollment.
If your loan is in repayment when you are called to active duty, UMD will grant a forbearance for the expected period of active duty, not to exceed one year.
Once the repayment period begins, you may be eligible for periods of deferment during which interest ceases to accrue on the loan(s) and repayment of principal is not required. Periods eligible for deferment status are described below:
You may continue to defer making scheduled installment payments and will not be liable for any interest that might otherwise accrue for a six-month period immediately following the expiration of any deferment period described in the above paragraphs.
To claim deferment, a Certification of Deferment Status form must be submitted to the school that made the loan:
Upon written request during the repayment period, the school may extend the repayment period for up to an additional ten years and adjust any repayment schedule to reflect your income. The school may extend the repayment period if, in its opinion, prolonged illness or unemployment prevent making the scheduled payments. During this time, interest will continue to accrue. The school may reduce minimum the monthly repayment rate for a period not more than one year at a time if you experience a period of prolonged illness or unemployment; such action may not extend the repayment period beyond 10 years.
Forbearance is the temporary postponement of payments, an extension of time allowed for making payments, or the acceptance of smaller payments than were previously scheduled. A written request and supporting documentation must be submitted to receive forbearance. Forbearance may be granted for up to one year, but will not exceed a total of three years. Both loan principal and any interest that accrues must be included in the forbearance. However, the borrower may choose to pay any interest that accrues during forbearance. Interest will accrue during any period of forbearance.
Forbearance must be granted if the school determines the borrower should qualify due to poor health or for other reasons, including service in AmeriCorps.
Upon making a properly documented written request to the school, up to 100% of the original principal loan amount may be cancelled by performing service in the areas listed in paragraphs 1, 2, 3, 4 and 5 below. Qualifying service must be performed after you receive the loan. **Rates for Teacher and other Employment Cancellations are up to 100% of the outstanding loan principal balance may be cancelled at the rate of 15% the 1st and 2nd year, 20% the 3rd and 4th year, and 30% the 5th year.**
A teacher is defined as on who is a professional employee of a school or school system working full-time for a complete academic year or its equivalent and who is devoted to providing classroom instruction or related services in support of the educational program.
The employment must be full-time and for a complete calendar year or its equivalent.
Death: If you die, the unpaid balance of the loan and accrued interest thereon is canceled. To claim cancellation, the executor of the estate or a family member must submit a death certificate to the lending school.
Permanent and Total Disability: If you become unable to engage in any substantial gainful activity because of a medically determinable impairment, the unpaid balance of the loan and accrued interest thereon may be canceled. To claim this entitlement, a formal request for cancellation must be submitted to the lending school, along with a physicians statement which certifies the date of onset, nature, and extent of your disability, and copies of medical records pertinent to the disability. Final approval of the loan cancellation will be made by the U.S. Department of Education.
Under the terms of the Federal Perkins Loan promissory note, the school will assess a charge, if a payment is not received when due or "timely" evidence of entitlement to deferment is not filed. Late charges may not exceed 20% of the monthly payment. In order to avoid late charges as specified in the note, payments, or forms for deferment in lieu of such payments, must reach the school on or before the due date.
If you fail to make a scheduled payment when due or to submit proper documentation of deferment, cancellation or forbearance, the school may declare your loan in default and accelerate your loan. The school will disclose to all 3 national credit bureaus that the loan is in default. If you default on repayment of your loan, you will lose the right to apply for forbearance and cancellation benefits. You will also lose the right to be awarded further federal student financial assistance until satisfactory arrangements have been made to repay the loan.
If you fail to make a scheduled payment, or fail to comply with any other terms of your promissory note, the Institution may:
Defaulted Perkins Loan borrowers may be eligible for rehabilitation. Eligible borrowers must request rehabilitation. Perkins Loan rehabilitation is achieved by making nine consecutive, on-time monthly payments on a defaulted Perkins Loan. After successfully completing 9 consecutive payments the borrower will again be eligible for all remaining benefits from the original promissory note. The default will be removed from the borrower's credit bureau report.
UMD Home Page
Document URL : http:// d.umn.edu /umdbo/perkins.html
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