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3 – Types of Student Aid

Federal Pell Grant

A Federal Pell Grant, unlike a loan, does not have to be repaid. Generally, Pell Grants are awarded only to undergraduate students who have not earned a bachelor’s or professional degree. (A professional degree is usually earned after earning a bachelor’s degree in a field such as medicine, law, or dentistry.) In some cases, you may receive a Pell Grant for attending a post-baccalaureate teacher certificate program. For many students, Pell Grants provide a foundation of financial aid to which other aid may be added.

 

How do I qualify?

To determine if you’re eligible financially, the U.S. Department of Education uses a standard formula, established by Congress, to evaluate the information you report when you apply (see “Financial Need”) The formula produces an Expected Family Contribution (EFC) number. Your Student Aid Report (SAR) contains this number, in the upper right portion of page 1, and will tell you if you’re eligible for a Pell Grant.

 

How much money can I get?

Awards for the 2005-2006 award year (July 1, 2005 to June 30, 2006) will depend on program funding. The maximum award for the 2004-2005 award year was $3,300. You can receive only one Pell Grant in an award year. How much you get will depend not only on your EFC but also on your cost of attendance, whether you’re a full-time or part-time student, and whether you attend school for a full academic year or less. You may not receive Pell Grant funds from more than one school at a time.

 

How will I be paid?

Your school can either credit the Pell Grant funds to your school account, pay you directly (usually by check), or combine these methods. The school must tell you in writing how and when you’ll be paid and how much your award will be. Schools must pay you at least once per term (semester, trimester, or quarter). Schools that do not use formally defined, traditional terms must pay you at least twice per academic year.

 

Can I receive a Federal Pell Grant if I am enrolled less than half time?

Yes, if you’re otherwise eligible. You won’t receive as much as if you were enrolled full time, but your school must disburse your Pell Grant funds in accordance with your enrollment status and cannot refuse you an award simply because you’re enrolled less than half time.

 

Direct and FFEL Stafford Loans

Stafford Loans are the Department’s major form of self-help aid for students. Depending on the school you attend, your Stafford Loans may be made either through the Federal Direct Student Loan (Direct Loan) Program or through the Federal Family Education Loan (FFEL) Program. Some schools participate in the Direct Loan Program others participate in the FFEL Program. Direct Stafford Loans and FFEL Stafford loans have identical loan limits, and identical deferment and cancellation provisions. The major difference between the two is the source of the loan funds. Under the Direct Loan Program, the funds for your loan are lent to you by the U.S. government, under the FFEL Program, the funds for your loan are lent to you from a private lender (a bank, credit union, or other lender that participates in the FFEL Program). Loan repaymenT options for Direct Loans and FFEL differ somewhat.

The Direct and FFEL programs also offer PLUS Loans for parents of dependent students and Consolidation Loans.

 

What kinds of Direct and FFEL Stafford Loans are available?

Direct and FFEL Stafford Loans are either subsidized or unsubsidized. You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.

A subsidized loan is awarded on the basis of financial need. You will not be charged any interest before you begin repayment or during authorized periods of deferment. The federal government “subsidizes” the interest during these periods.

An unsubsidized loan is not awarded on the basis of need. You’ll be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accumulate, it will be capitalized-that is, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount.

NOTE: If your interest is capitalized, it will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you’ll repay less in the long run. In addition, the amount of interest you pay during the first 60 months that interest payments are required may be tax deductible.

 

Who can get a Direct or FFEL Stafford Loan?

If you’re a regular student enrolled in an eligible program at least half time, you may receive a Direct or FFEL Stafford Loan. You must also meet other general eligibility requirements.

 

How much can I borrow?

If you’re a dependent undergraduate student you can borrow up to $2,625 if you’re a first-year student enrolled in a program of study that is at least a full academic year. $3,500 if you’ve completed your first year of study and the remainder of your program is at least a full academic year. $5,500 a year if you’ve completed two years of study and the remainder of your program is at least a full academic year. If you’re an independent undergraduate student or a dependent student whose parents are unable to get a PLUS Loan, you can borrow up to $6,625 if you’re a first-year student enrolled in a program of study that is at least a full academic year (only $2,625 of this amount may be in subsidized loans). $7,500 if you’ve completed your first year of study and the remainder of your program is at least a full academic year (only $3,500 of this amount may be in subsidized loans). $10,500 a year if you’ve completed two years of study and the remainder of your program is at least a full academic year (only $5,500 of this amount may be in subsidized loans). For periods of study that are less than an academic year, the amounts you can borrow will be less than those just listed. Talk to your financial aid administrator to find out how much you can borrow.

NOTE: Direct and FFEL Stafford Loans are not made to students enrolled in programs that are less than one-third of an academic year.

NOTE: The amounts given above are the maximum yearly amounts you can borrow in both subsidized and unsubsidized loans. You may receive less than these yearly maximum amounts if you receive other financial aid that is used to cover a portion of your cost of attendance. Generally, the total debt you can have outstanding from all Stafford Loans combined is $23,000 as a dependent undergraduate student. $46,000 as an independent undergraduate student (only $23,000 of this amount may be in subsidized loans).

NOTE: Your school can refuse to certify your loan application or can certify a loan for an amount less than you would otherwise be eligible for, if the school documents the reason for its action and explains the reason to you in writing. The school’s decision is final and cannot be appealed to the U.S. Department of Education.

 

How will I receive my Direct or FFEL Stafford Loan?

For a Direct Loan, the U.S. Department of Education will pay you through your school. For a FFEL Stafford Loan, the lender will send your loan funds to your school. In most cases, your loan will be disbursed in at least two installments, and no installment will be greater than half the amount of your loan.

Your loan money must first be used to pay for your tuition, fees, room and board. If loan money remains, you’ll receive the funds by check or in cash unless you give the school written permission to hold the funds until later in the enrollment period.

At some schools, if you’re a first-year undergraduate student and a first-time borrower, your first payment cannot be disbursed until 30 days after the first day of your enrollment period. This way, you won’t have to repay the loan if you don’t begin classes or if you withdraw during the first 30 days of classes. However, you may owe money to the school for a portion of tuition or other fees. This 30-day delayed disbursement requirement does not apply at schools with particularly low loan default rates.

 

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 Direct or FFEL Stafford 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 Stafford Loan funds directly by check, you may refuse the funds by not endorsing the check.

 

What’s the interest rate charged on these loans?

The interest rate on your loan could change each year of repayment but, by law, it will never exceed 8.25 percent. The interest rate is adjusted each year on July 1. You’ll be notified of interest rate changes throughout the life of your loan.

Congress changed the interest rate calculation for Stafford loans made on or after October 1, 1998. If you have loans that were first disbursed before October 1, 1998, the interest rate on these loans may be different. For a FFEL Stafford Loan, check with your lender. For a Direct Stafford Loan, check with your school.

If you have subsidized loans, you will not be charged interest while you’re enrolled in school at least half time, during a grace period, or during authorized periods of deferment (see below). Interest will begin to accrue-that is, accumulate-when you enter repayment.

If you have unsubsidized loans, you’ll be charged interest from the day the loan is disbursed until it is repaid in full, including in-school, grace, and deferment periods. You may choose to pay the interest during these periods, or it can be capitalized.

 

Is there a charge for these loans?

You’ll pay a fee of up to 4 percent of the loan. This fee is deducted proportionately from each disbursement of your loan. For a FFEL Stafford Loan, a portion of this fee goes to the federal government and a portion goes to the guaranty agency to help reduce the cost of the loans. For a Direct Stafford Loan, all of this fee goes to the government to help reduce the cost of the loans. Also, if you don’t make your loan payments when they’re scheduled, you may be charged collection costs and late fees.

 

When do I pay back these loans?

After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment (you may have longer than six months if you are on active duty with the military). This is called a “grace period.”

During the grace period on a subsidized loan, you don’t have to pay any principal, and no interest will be charged. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but interest will be charged. You can either pay the interest or it will be capitalized.

After you leave school or drop below half time enrollment, you’ll receive information about repayment and will be notified of the date repayment begins. However, you are responsible for beginning repayment on time, even if you don’t receive this information.

Failing to make payments on your loan may have a negative effect on your credit rating.

 

Is it ever possible to postpone repayment of my loan?

Yes. Under certain circumstances, you can receive a deferment or forbearance on your loan. A deferment allows you to temporarily postpone payments on your loan. If you have a subsidized loan, you will not be charged interest during the deferment. If your loan is unsubsidized, you will be responsible for the interest on the loan during the deferment. If you don’t pay the interest as it accrues, it will be capitalized and increase the amount you will have to repay. Deferments are available if you do not have an outstanding balance on a FFEL loan received before July 1, 1993.

For information on deferments available to borrowers with outstanding loans received prior to that date, Direct Stafford Loan borrowers should contact the Direct Loan Servicing Center at:

The Direct Loan Servicing Center
Borrower Services: 1-800-848-0979 or 1-315-738-6634
Fax: 1-800-848-0984
TTY: 1-800-848-0983
www.dlservicer.ed.gov

FFEL Stafford borrowers should contact the lenders or agencies holding the loans. You can’t receive a deferment if your loan is in default.

If you are temporarily unable to meet your repayment schedule but are not eligible for a deferment, you may receive forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced. Whether your loans are subsidized or unsubsidized, you will be charged interest. If you don’t pay the interest as it accrues, it will be capitalized.

For example, you may be granted forbearance if you are:

  • unable to pay due to poor health or other unforeseen personal problems
  • serving in a medical or dental internship or residency
  • serving in a position under the National Community Service Trust Act of 1993 (forbearance may be granted for this reason for a Direct or FFEL Stafford Loan, but not for a Direct or FFEL PLUS Loan).
  • obligated to make payments on certain federal student loans that are equal to or greater than 20 percent of your monthly gross income.

Deferments and forbearances are not automatic. If you have a Direct Stafford Loan, you must contact your Direct Loan Servicing Center to request either option. If you have a FFEL Stafford Loan, you must contact the lender or agency that holds your loan. For either program, you may have to provide documentation to support your request. You must continue making scheduled payments until you receive notification that the deferment or forbearance has been granted. Failing to make payments on your loan may have a negative effect on your credit rating.

 

Can my loan be discharged (canceled)?

In certain circumstances. A discharge releases you from all obligation to repay the loan. A complete listing of discharge conditions is given, click here. Your loan can’t be discharged because you didn’t complete the program of study at the school (unless you were unable to complete the program because the school closed), didn’t like the school or the program of study, or didn’t obtain employment after completing the program of study.

Repayment assistance (not a discharge but another way to satisfy your obligation to repay) may be available if you serve in the military. For more information, contact your recruiting officer.

For more information about discharge or repayment assistance, Direct Stafford Loan borrowers should contact the Direct Loan Servicing Center. FFEL Stafford Loan borrowers should contact the lenders or agencies that hold their loans.

 

DIRECT STAFFORD LOANS

How do I apply for a Direct Stafford Loan?

First, you must complete the 2005-2006Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After your FAFSA is processed, your school will review the results and will inform you of your loan eligibility. You must then complete the promissory note provided by your school or the Direct Loan Servicing Center. Remember, the promissory note is a legal document requiring you to repay the loan. Read it carefully before you sign.

How do I pay back my Direct Stafford Loan?

The Direct Loan Program offers four repayment plans. The repayment plans will be explained in more detail during entrance and exit counseling sessions at your school. The chart below shows estimated monthly payments for various loan amounts under each of the plans. In some cases it may be beneficial for you to consolidate one or more of your Direct Stafford Loans into a Consolidation Loan.

You may choose one of the following repayment plans:

  • The Standard Repayment Plan requires you to pay a fixed amount each month-at least $50-for up to 10 years. The length of your actual repayment period will depend on your loan amount.
  • The Extended Repayment Plan allows you to extend loan repayment over a period that is generally 12 to 30 years, depending on your loan amount. Your monthly payment may be lower than it would be if you repaid the same total loan amount under the Standard Repayment Plan, but you may repay a higher total amount of interest over the life of your loan because the repayment period may be longer. The minimum monthly payment is $50.

Under the Graduated Repayment Plan, your payments will be lower at first and then increase generally every two years. The length of your repayment period will generally range from 12 to 30 years, depending on your loan amount. Your monthly payment may range from 50 percent to 150 percent of what it would be if you were repaying the same total loan amount under the Standard Repayment Plan. However, you’ll repay a higher total amount of interest because the repayment period is longer than it is under the Standard Repayment Plan.

The Income Contingent Repayment Plan bases your monthly payment on your yearly income, family size, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.

Loan payments are made to the U.S. Department of Education. For more information on repayment options, you can get a copy of the Direct Loans Repayment Book by contacting the Federal Student Aid Information Center.

FFEL STAFFORD LOANS

 

How do I apply for a FFEL Stafford Loan?

First, you must complete the 2005-2006 Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After your FAFSA is processed, your school will review the results and will inform you about your general loan eligibility. Next, you must complete the promissory note. Remember, the promissory note is a legal document requiring you to repay the loan. Read it carefully before you sign.

 

How do I pay back my FFEL Stafford Loan?

There are three repayment plans that are available to borrowers of FFEL Stafford Loans if your first FFEL Program Loan was disbursed on or after July 1, 1993. All the repayment plans require you to repay the loan within 10 years. Also, no scheduled payment may be more than three times greater than any other of your scheduled payments. The repayment plans will be explained in more detail during entrance and exit counseling sessions provided by your school. Aspects of these repayment plans will vary by lender. Check with the lender for complete information.

In some cases it may be beneficial for you to consolidate one or more of your FFEL Stafford Loans into a Consolidation Loan. You may choose one of the following repayment plans:

  • A Standard Repayment Plan requires you to pay a fixed amount each month-at least $50 or the interest that has accrued.
  • Under a Graduated Repayment Plan, your payments will be lower at first and then increase over time. Each of your payments must at least equal the interest accrued on the loan between scheduled payments.
  • An Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. As your income rises or falls, so do your payments. Each of your payments must at least equal the interest accrued on the loan between scheduled payments.

If you are a new FFEL borrower after October 7, 1998, and you have FFEL loans totaling more than $30,000, you can choose an Extended Repayment Plan. Under an Extended Repayment Plan, your payments will be fixed or graduated (lower at first and then increased over time) over a period of up to 25 years. You are allowed to pick a different repayment plan once a year. Your repayment plan will not change unless you request a change. If you do not choose a repayment plan when you first begin repayment, you will repay under a Standard Repayment Plan.

 

PLUS LOANS

PLUS Loans enable parents with good credit histories to borrow to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time. PLUS Loans are available through both the Direct Loan and FFEL programs. Most of the benefits to parent borrowers are identical in the two programs.

 

Are there any borrowing requirements my parents have to meet?

Yes. To be eligible to receive a PLUS Loan, your parents generally will be required to pass a credit check. If they don’t pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan, promising to repay it if your parents should fail to do so. Your parents might also qualify for a loan even if they don’t pass the credit check if they can demonstrate that extenuating circumstances exist. You must meet the general eligibility requirements for federal student financial aid. Your parents must also meet some of these general requirements. For example, your parents must meet citizenship requirements and may not be in default or owe a refund to any Student Financial Assistance (SFA) Program.

 

How much can my parents borrow?

The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $6,000 and you receive $4,000 in other financial aid, your parents could borrow up to-but no more than-$2,000. NOTE: Your school can refuse to certify your parents’ loan application, or can certify a loan for an amount less than they would otherwise be eligible for, if the school documents the reason for its action and explains the reason to your parents in writing. The school’s decision is final and cannot be appealed to the U.S. Department of Education.

 

What’s the interest rate on PLUS Loans?

The interest rate could change each year of repayment, but, by law, it will never exceed 9 percent. The interest rate is adjusted each year on July 1. Your parents will be notified of interest rate changes throughout the life of their loan. Interest is charged on the loan from the date that the first disbursement is made until the loan is paid in full. Congress changed the interest rate calculation for PLUS loans made on or after October 1, 1998. If your parents had PLUS loans that were first disbursed before October 1, 1998, the interest rate on these loans may be different.

 

How will my parents be paid?

For a Direct PLUS Loan, the U.S. Department of Education will send the loan funds to your school. For a FFEL PLUS Loan, the loan funds will be sent to your school by the lender. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be used to pay for your tuition, fees, room and board, and other school charges. If any loan money remains, your parents will receive the amount as a check or in cash, unless they authorize it to be released to you or to be put in your school account. Any remaining loan money must be used for your education expenses.

 

Will my parents have an opportunity to cancel their PLUS Loan after they sign the promissory note?

Yes. Your school must notify your parents in writing whenever it credits your account with your Direct or FFEL PLUS Loan funds. This notification must be sent to your parents no earlier than 30 days before, and no later than 30 days after the school credits your account. Your parents may cancel all or a portion of their loan if they inform your school that they wish to do so within 14 days after the date that your school sends 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 your parents receive PLUS Loan funds directly by check, they may refuse the funds by not endorsing the check.

 

Is there a charge for a PLUS Loan?

Your parents will pay a fee of up to 4 percent of the loan. This fee is deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government and a portion goes to the guaranty agency to help reduce the cost of the loans. For a Direct PLUS Loan, all of this fee goes to the government to help reduce the cost of the loans. Also, if your parents don’t make their loan payments when they’re scheduled, your parents may be charged collection costs and late fees.

 

When do my parents begin repaying a PLUS Loan?

Generally, repayment must begin within 60 days after the final loan disbursement for the period of enrollment for which you borrowed. There is no grace period for these loans. This means that interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both principal and interest while you’re in school.

 

Is it ever possible to postpone repayment of a PLUS Loan?

Yes. Under certain circumstances, your parents can receive a deferment or forbearance on their loan. Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance that apply to Stafford Loans also apply to PLUS Loans.

However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they do not pay the interest as it accrues, it will be capitalized.

 

Can a PLUS Loan be discharged (canceled)?

Yes, under certain circumstances. A discharge releases your parents from all obligation to repay the loan.

Your parents’ loan cannot be discharged because you didn’t complete your program of study at your school (unless you were unable to complete the program because the school closed), didn’t like the school or the program of study, or didn’t obtain employment after completing the program of study.

For more information about loan discharge or repayment, Direct PLUS Loan borrowers should contact the Direct Loan Servicing Center. FFEL PLUS Loan borrowers should contact the lenders or agencies that hold their loans

 

CAMPUS BASED PROGRAMS

The three programs discussed in this section are called campus-based programs because they’re administered directly by the financial aid office at each participating school. Not all schools participate in all three programs. The Federal Supplemental Educational Opportunity Grant (FSEOG) Program awards grants; the Federal Work-Study Program offers jobs; and the Federal Perkins Loan Program offers loans. Even though each program is different, they have these characteristics in common: How much aid you receive depends on such factors as your financial need, on the amount of other aid you’ll receive, and on the availability of funds at your school. Unlike the Federal Pell Grant Program, which provides every eligible student with funds, each school participating in any of the campus-based programs receives a certain amount of funds from the federal government for each campus-based program each year. When that money is gone, no more awards can be made from that program for that year.

Each school sets its own deadlines for students to apply for campus-based funds. The deadlines will usually be earlier than the U.S. Department of Education’s deadline for filing a federal student financial aid application (in this case, July 2, 2003). Ask your financial aid administrator about the school’s deadlines. You may miss out on aid from these programs if you don’t apply early.

 

FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS

 

What is a Federal Supplemental Educational Opportunity Grant?

A Federal Supplemental Educational Opportunity Grant (FSEOG) is for undergraduates with exceptional financial need-that is, students with the lowest Expected Family Contributions (EFCs)-and gives priority to students who receive Federal Pell Grants. An FSEOG doesn’t have to be paid back.

 

What’s the difference between the FSEOG and Federal Pell Grant?

The U.S. Department of Education guarantees that each participating school will receive enough money to pay the Federal Pell Grants of its eligible students. There’s no guarantee every eligible student will be able to receive an FSEOG; students at each school may be awarded an FSEOG based on the availability of funds at that school.

 

How much money can I get?

You can receive between $100 and $4,000 a year, depending on when you apply, your level of need, the funding level of the school you’re attending, and the policies of the financial aid office where you attend school.

 

How will I be paid?

Your school will credit your account, pay you directly (usually by check), or combine these methods. Schools must pay students traditional terms must pay you at least twice during the academic year.

 

FEDERAL WORK STUDY

 

What is Federal Work-Study?

The Federal Work-Study Program provides jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to your course of study.

 

How much will I make?

Your Federal Work-Study wages will be at least the current federal minimum wage, but it may be higher, depending on the type of work you do and the skills required. Your total Federal Work-Study award depends on when you apply, your level of need, and the funding level of your school.

 

How will I be paid?

If you’re an undergraduate, you’ll be paid by the hour. If you’re a graduate student, you may be paid by the hour or you may receive a salary. No Federal Work-Study student may be paid by commission or fee. Your school must pay you at least once a month.

Your school must pay you directly, unless you request that the school make payments to your bank account, or use the money to pay for your institutional charges such as tuition, fees, room and board.

 

Are Federal Work-Study jobs on campus or off campus?

Both. If you work on campus, you’ll usually work for your school. If you work off campus, your employer will usually be a private nonprofit organization or a public agency, and the work performed must be in the public interest. Some schools may have agreements with private for-profit employers for Federal Work-Study jobs, which must be judged to be relevant to your course of study, to the maximum extent possible. If you attend a proprietary school, there may be further restrictions on the jobs you can be assigned.

 

Can I work as many hours as I want?

No. The amount you earn can’t exceed your total Federal Work-Study award. When assigning work hours, your employer or financial aid administrator will consider your class schedule and your academic progress.

 

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 exceptional 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 if you have completed two years of undergraduate work; otherwise, the total you can borrow is $8,000). $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. However, if you skip a payment, make a payment late, or make less than a full payment, you may have to pay a late charge. If your failure to make payments persists, you may 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 not endorsing 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 circumstances, 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. You may receive a deferment under certain conditions, such as unemployment.

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. If the borrower dies or becomes totally and permanently disabled, the loan can be canceled. 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 U.S. Armed Forces the U.S. Department of Defense may, 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.