The Federal Perkins Loan Program provides money for college for students with financial need.

The Federal Perkins Loan has been reauthorized for a limited period of time.  After that time the program will end permanently.  The information below reflects the Perkins Loan Program through the end of the 2016-2017 academic year.
  
The Federal Perkins Loan Program is one component of the Federal campus-based program. While Federally funded, the university administers the program. When a student enters repayment, he/she makes loan payments directly to the university or the university's service agent.

What is a Federal Perkins Loan?

The Federal Perkins Loan Program is a low-interest (5% fixed rate) for both needy undergraduate and graduate students. At the University of Michigan-Dearborn, the Federal Perkins Loan is awarded to our neediest students.  Funding is provided by the federal government and is very limited.

How much can I borrow?

There are restrictions on the maximum amount of Federal Perkins Loan that can be received on an annual basis and over your academic career. The Federal annual limit for undergraduates is $5,500, and the maximum aggregate is $27,500. For graduate students, the Federal annual limit is $8,000, and the maximum aggregate is $60,000 which includes all undergraduate Perkins debt.
 

Are there any charges for the Federal Perkins Loan?

There are no origination or other fees. Once you enter repayment, you may be charged late fees or collection fees, if you do not make your loan payments as required. The interest rate is a flat 5%.

How will I receive my funds?

You are required to complete a Federal Perkins Loan promissory note and a Borrower's Rights and Responsibilities Checklist before funds can be applied to your tuition account at the university. Funds will be applied electronically on a term-by-term basis.

If your total financial aid applied to your tuition account, including your Federal Perkins Loan, is greater than your charges, you will receive refund from the Student Accounts Office.  It is recommended that students enroll in direct deposit to have refunds electronically deposited in their checking or savings account through the Student Accounts Office.

Do I need to be full-time to receive this loan?

Full-time enrollment is not required, but recipients must be at least half-time (6 credits undergraduate and 4 credits graduate) to be eligible for Federal Perkins Loan.

The disbursed amount of the Perkins Loan will prorate at a less than full-time enrollment status (75% of original amount at 3/4-time and 50% of the original amount at half-time.)

If I change my mind about borrowing, can I cancel the loan?

If you want to reduce or cancel your loan prior to its disbursement, you will need to notify the Office of Financial Aid & Scholarships in writing.  An email can be sent from your university account with your full name and UMID to accompany your request to cancel or reduce your loan. 

If you wish to reduce or cancel your Federal Perkins Loan after disbursement, you must provide a signed written statement to cancel or reduce your loan within 14 days of disbursement to the Office of Financial Aid & Scholarships. You will know that Federal Perkins Loan funds have been applied to your account because you will receive a Notice of Disbursement/Right to Cancel email from the Office of Financial Aid and Scholarships  detailing this transaction.

If you received a refund check from the proceeds of your Federal Perkins Loan, you should submit the check to the Office of Financial Aid & Scholarships with your written request to reduce or cancel your loan.
 

When do I start repayment?

If you are enrolled at least half-time (6 credits undergraduate and 4 credits graduate), you will have a nine-month grace period after you graduate, leave school or drop below half-time before you must begin repayment. At the end of your grace period, you must begin repaying your loan on a monthly basis.

Since the Perkins Loan is a federal student loan, you may wish to consolidate your  Federal Perkins Loan with your other federal student loans to have only one payment.

How much can I expect as a monthly payment?

Your monthly payment will depend on the size of your debt and the length of your repayment period.  Your repayment period can be as long as 10 years.

Please see the following website for further information regarding billing, payment, and deferment processes for your Federal Perkins Loan:

http://www.finance.umich.edu/finops/collections.

Am I eligible to postpone repayment?

Under certain conditions, you may be eligible to receive a deferment or a forbearance on your loan, but  your loan cannot be in default.

  • A deferment allows you to temporarily postpone payments, no interest accrues on your loan.
  • A forbearance may be granted for intervals up to 12 months at a time for a maximum of 3 years.

Until your deferment or forbearance has been granted, you should continue to make your scheduled loan payments. You will notice that there are different and fewer options for repayment as well as  cancelation, forgiveness, or discharge in the Federal Perkins Loan Program than in the Federal Direct Student Loan Program.

Are there any programs that would allow me to have some or all of my Federal Perkins Loan cancelled?

A Federal Perkins Loan can be canceled if the borrower dies or becomes totally and permanently disabled. There are other conditions that allow for the cancelation of a Perkins loan as long as the borrower is not in default.  Additional details are available at the Federal Perkins Loan Discharge and Summary Chart.

What happens if I don'’t repay my loan?

Failure to repay a loan according to the terms agreed to when you signed promissory notes will result in a status called default. In many cases, default can be avoided by submitting a request for deferment, forbearance or cancelation and by providing the required documentation before you reach the point of default.

The consequences of default are severe. Action may be taken to recover the money, including notifying national credit bureaus of your default. This will affect your credit rating for a long time. For example, you may find it very difficult to borrow money from a bank to buy a house or a car. In addition, if your account is turned over to the U.S. Department of Education for collection, the Internal Revenue Service (IRS) might withhold any U.S. individual income tax refund and apply it to the amount that you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck.

In addition, you are responsible for the expenses in collecting the loan. If you decide to return to school, you will not be eligible for any additional Federal student aid until your loan has been repaid or you have made satisfactory payment arrangements (and kept them.) You may even face legal action.