Financial Aid


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 (EFC of 0-1000.) Funding is provided by the federal government and the university 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 $4,000, and the maximum aggregate is $20,000. For graduate students, the Federal annual limit is $6,000, and the maximum aggregate is $40,000—which includes all undergraduate Perkins debt.

At the University of Michigan-Dearborn, our annual loan limit is $3,000.


Are there any charges for the Federal Perkins Loan?
Other than interest that accrues after you complete your grace period, 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.


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 a direct deposit to your checking or savings account.  You must enroll in the direct deposit program with the Cashiers/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 complete a new Student Decision Form. You will mark “cancel” for the term or terms that you wish to cancel in the Federal Perkins Loan column. If you wish to reduce the loan, mark “reduced” with the new amount that you wish to borrow (not the amount you are reducing) in the Federal Perkins Loan column. Note at the top of the form “REVISED” and submit to the Office of Financial Aidas soon as possible. Your loan will be reduced or cancelled.

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. 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 form from the Office of Financial Aid 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 as part of the cancellation process.


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.


How much can I expect as a monthly payment?
Your monthly payment will depend on the size of your debt and the length of repayment period. The repayment period can be as long as ten years.

Examples of Typical Payments for Perkins Loan Repayment

Total Loan Amount

Number of Payments

Approximate Monthly Payment

Total Interest Charges

Total Repaid

$4,000

120

$42.43

$1,09.01

$5,091.01

$5,000

120

$53.03

$1,1364.03

$6,364.03

$15,000

120

$159.10

$4,091.73

$19,091.73


Am I eligible to postpone repayment?
Under certain conditions, you may be eligible to receive a deferment or a forbearance on your loan (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.


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 cancelled if the borrower dies or becomes totally and permanently disabled. There are other conditions that allow for the cancellation of a Perkins loan as long as the borrower is not in default.


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 cancellation 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.