Perkins Loan

The Perkins Loan offers the advantage that repayment of the loan begins nine months after you leave college or drop below half-time status, versus the more standard six month grace period. The repayment period for a Perkins loan is ten years. You will pay both principal and a portion of the fixed 5% interest rate. There is no penalty if you wish to repay your loan over a shorter time period.

Payment Schedule

The minimum monthly Perkins loan repayment is $40.00. Your payment schedule will depend upon how much money you borrowed and the length of the borrowing period. (Usually ten years.) The U.S. Department of Education publishes the following table that illustrates typical payment amounts for varying loans over ten years at 5% interest.

Total Loan Amount	# of Payments	Approximate Monthly Payment	Total Interest Charges	Total Repaid
$4,000	120	$42.43	$1,091.01	$5,091.01
$5,000	120	$53.03	$1,364.03	$6,364.03
$15,000	120	$159.10	$4,091.73	$19,091.73

You will make your loan payments directly to the college that loaned you the money. IN some cases, you may be able to pay quarterly and you may be able to pay by electronic withdrawal from a bank account.

Tax Incentives

There are tax incentives available for some higher education expenses, including a deduction for student loan interest for certain borrowers. This benefit applies to federal and nonfederal loans used to pay for postsecondary education costs. The maximum deduction is $2,500 a year. IRS Publication 970, Tax Benefits for Higher Education, explains these credits and other tax benefits. (www.irs.gov/pub/irs-pdf/p970.pdf)

Deferment of Payments

You may be able to defer payment of your Perkins loan if you qualify under a variety of circumstances. Read “Perkins Loan Deferment” for a thorough review of the available ways to defer payment.

Payment Forbearance

You may be eligible for a loan forbearance, which allows you to temporarily lower or postpone loan payments, even if you are not eligible for a deferment. Read “Perkins Loan Forbearance” for a better understanding of how to qualify for forbearance.

Cancellation

Your Perkins loan may be eligible for cancellation, forgiveness or repayment by other means. Please read “Perkins Loan Cancellation” and “Perkins Loan Forgiveness” for more information.

Default on Perkins Loan Repayment

Default is failure to repay a loan according to the terms agreed to when you signed a promissory note. The consequences of default are severe. Your school may take action to recover the money, including notifying national credit bureaus of your default. If you return to school, you’re not entitled to receive additional federal student aid. If you believe that you will not be able to repay your loan for a time, contact the school that loaned you the money and make an arrangement. The more upfront, honest and diligent you are about making payment arrangements, the less likely the school will be to pursue action against you.