Financial Collections

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

General Information

Change of Status
Until your loan is repaid, please keep the UMD Financial Collections Office informed of any change in your name, address, telephone number, Social Security number, or driver’s license number.

Prepayment
All or any part of your unpaid loan balance may be paid at any time without penalty.

Interest Rates
All loans made on or after August 13, 1981 carry an interest rate of five percent (5%) per year.

Grace Period
All loans made after June 30, 1987, carry a grace period of nine months, during which time interest does not accrue on the loan and repayment is not required. The grace period ALWAYS begins on the date you cease to be at least a half-time student.

Student Loan Ombudsman
If you dispute the terms of your NDSL or Federal Perkins Loan in writing and the holder of your loan is unable to resolve the dispute, you may seek the assistance of the Department of Education's Student Loan Ombudsman. The Student Loan Ombudsman will review and attempt to informally resolve your dispute and may be reached at 1-877-557-2575.

Repayment of Loan

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.

Military Deployment

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.

Deferment

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:

• If you are enrolled in an institution of higher learning and pursuing at least a half-time course of study.
• If you are a student in a graduate fellowship program approved by the Secretary.
• If you are engaged in graduate or post-graduate fellowship supported study outside the U.S.
• If you are enrolled and attending a rehabilitation training program for disabled individuals.
• If you are engaged in public service that qualifies for having part or all of your loan cancelled
• For a period not to exceed three years during which you are seeking but unable to find full-time employment.
• For a period not to exceed three years during which you experiencing an economic hardship as determined by the school.

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:

1. when the first installment is due
2. every six months thereafter
3. upon termination of such status

Hardship Repayment Options

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

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.

Cancellation

Upon making a properly documented written request to the school, up to 100% (see cancellation rates for each employment category below) 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.

1. Teaching: a full-time teacher in a public or other nonprofit elementary or secondary school, which has been designated as low-income; a full-time special education teacher in a public or non-profit elementary or secondary school system; a full-time teacher, in a public or other non-profit elementary or secondary school system, who teaches mathematics, science, foreign languages, bilingual education, or any other field of expertise that is determined by the State Department of Education to have a shortage of qualified teachers in that State.
2. Early Intervention Services: a full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by a lead agency.
3. Law Enforcement or Corrections Officer: a full-time law enforcement officer or corrections officer for an eligible local, state, or federal law enforcement agency.
4. Nurse or Medical Technician: a full-time nurse or medical technician providing health care services.
5. Child or Family Service Agency: a full-time employee of an eligible public or private non-profit child or family service agency who is providing or supervising the provision of services to high-risk children who are from low-income communities and the families of such children.

   Cancellation Rates – For each completed year of service under paragraphs 1, 2, 3, 4 and 5 above, a portion of this loan will be canceled at the following rates:

   15% of the original principal loan amount for each of the first and second years, 20% for each of the third and fourth years, and 30% for the fifth year.

6. Head Start Cancellation – Up to 100% of the original principal loan amount canceled for qualifying service performed as: a full-time staff member in the educational component of a Head Start Program which is operated for a period comparable to a full school year and which pays a salary comparable to an employee of the local educational agency.

   Cancellation Rate – For each completed year of service at the rate of 15% of the original principal loan amount.

7. Military Cancellation – 50% of the original principal loan amount may be canceled as a member of the Armed Forces in an area of hostilities (combat zone) that qualifies for special pay.

   Cancellation Rate – For each year of service 12 ½% of the original principal loan amount.

8. Volunteer Service Cancellation – Up to 70% of the original principal loan amount canceled as a volunteer under the Peace Corps or AmeriCorps/VISTA programs.

Cancellation Rate – For each completed year of service a portion of this loan will be canceled at the following rates: 15% of the original principal loan amount for each of the first and second years of service, 20% for each of the third and fourth years.

Death or Disability

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 physician’s 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.

Penalties

Late Charges

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.

Default

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 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.

Collection Agents, Litigation and Withholding of Services

If you fail to make a scheduled payment, or fail to comply with any other terms of your promissory note, the Institution may:

1. refer your loans to a collection agent for further collection efforts;
2. initiate legal proceedings against you, including possible offset of Minnesota state income tax refunds;
3. withhold institution services, such as registration, transcripts, letters of recommendation, and degree;
4. obtain your address from the Internal Revenue Service, if the Institution has no current address for you.

Loan Rehabilitation

Defaulted Perkins Loan borrowers may be eligible for rehabilitation. Eligible borrowers must request rehabilitation. Perkins Loan rehabilitation is achieved by making twelve consecutive, on-time monthly payments on a defaulted Perkins Loan. After successfully completing 12 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.

Additional Information
Any questions regarding repayment of your Perkins Loan(s) not answered on this site should be directed to: University of Minnesota Duluth, Financial Collections, 129 DAdB, 1049 University Drive, Duluth, MN 55812-3011. Telephone: 218-726-8103. Email: fincoll@d.umn.edu.