Repayment and Grace Period
When borrowing a Federal Perkins Loan, you won’t have to start making payments right away when leaving school. Federal Perkins
Loans have a fixed APR of 5% and a nine-month grace period that starts the day after you stop attending at least half-time(this may be sooner if you are a less than half time borrower). You are not required to make payments during your grace period (you might have longer than nine months if you’re on active duty with the military). Once you are ready to begin repayment on your Federal Perkins Loan(s), the school will as a regular practice, set you up on a standard repayment plan (Federal Perkins Loans offer only one repayment option). The repayment period may be extended during periods of deferment, hardship, or forbearance. You must contact your school or loan provider to discuss or apply for deferment and forbearance options.
Forbearance, Deferment and Loan Discharge/Forgiveness
One way to have your payments postponed is through a deferment. A deferment is a period of time during which your lender temporarily suspends your regular payments. Deferments are not automatic; you must apply and be approved for deferment. The most common reasons for deferment include:
- Returned to school for at least half-time attendance
- Loss of a job or inability to find a job
- Economic hardship
- Graduate fellowship program
- Rehabilitation training program
- Military service
Refer to your promissory note for specific deferment provisions.
If you are having difficulty repaying your loan but do not qualify for a deferment, you may request a forbearance from your lender or servicer.
Forbearance is the temporary postponement or reduction in your payment. It may extend the time it takes to repay your loan. Interest continues to accrue during the forbearance, causing the total loan amount to increase. You must contact your lender/holder to request forbearance. Most forbearance is discretionary – it is completely up to your school to grant one. Some possible reasons for forbearance include:
- Poor health
- Loan payment that exceeds 20 percent of your total monthly gross income
- Circumstances such as a local or national emergency,
- military mobilization, or natural disaster;
- Serving in a position that may qualify you for loan forgiveness, partial repayment of your loan, or a national service educational award.
You may be eligible for loan discharge/forgiveness if you meet the federally mandated requirement. If you are eligible for loan discharge, your student loan will be forgiven, and you will not have to repay the loan. GENERALLY, FEDERAL STUDENT LOANS MAY NOT BE DISCHARGED OR CANCELLED DUE TO BANKRUPTCY. Possible reasons for student loan discharge include:
- Total and permanent disability
- School closure
- False certification
- Identity Thief
- Certain areas of the teaching or child care professions.
- Certain Public Service Employees
- Survivors of victims of the September 11, 2001, attacks
Loan Repayment Programs
–There are certain programs that help borrowers repay loans. These include but are not limited to:
- AmeriCorps service program (www.americorps.org or (800) 942-2677) and
- Serving as an enlisted person in the National Guard or Reserve programs (contact your recruiter for information).
- Consequences of Default
- If you fail to repay your student loan, you will be considered to be in default and the following may result:
- Loss of deferment and forbearance options.
- Loss of further federal or state student financial aid (grants or loans).
- Loss of professional license.
- A negative credit notation to national credit reporting bureaus.
- Possible seizure of federal/state income tax refunds and lottery winnings.
- Possible wage garnishment.
- Loss of eligibility for certain state or federal jobs.
The entire unpaid balance of loan(s) including accrued interest immediately becomes due and payable in full.
For additional Terms and Conditions, please refer to the Federal Perkins Master Promissory Note