Federal Perkins Loan Program Borrower's Guide
Q. WHAT IS A STUDENT LOAN?
A. A student loan is a low-interest loan. When you accept the loan, you state that you understand the loan is a financial responsibility that must be repaid and the loan will be used only for educational expenses.
Q. WHAT IS A MASTER PROMISSORY NOTE?
A. The promissory note is a legal document describing the terms of the loan including interest rate, and your promise to make payments as the terms say. The 'master' promissory note is signed at the time of the first loan award and covers the next 3 years of awards, in other words you sign a promissory note before the first disbursement is made and it covers all loan advances thereafter.
Q. WHAT IS INTEREST, THE INTEREST RATE, AND HOW DOES IT ACCRUE?
A. Besides the amount of money borrowed (called principal), there is an interest charge for borrowing that money. The interest rate depends on the loan program you are borrowing from. For the Perkins loan, the interest rate is currently 5% fixed. The promissory note must state the amount of interest.
Interest begins to accrue at the beginning of the repayment period on the unpaid balance except during any eligible grace or deferment periods.
Q. WHAT IS A GRACE PERIOD?
A. Depending on the loan program you borrow from, the term "grace period" is the nine or six-month interval between the termination of at least half-time study and the beginning of the repayment period. The Perkins student loan has a nine month grace period.
Q. WHO IS MY LENDER AND HOLDER OF MY LOAN?
A. DePauw is your lender and will hold the promissory note until the loan account is paid in full.
Q. WHAT DO I DO NOW THAT I HAVE BEEN AWARDED A LOAN AND HOW WILL I RECEIVE IT?
A. Students who have been awarded and accepted a loan from DePauw funds must sign a master promissory note online, complete ENTRANCE COUNSELING ONLINE and complete paper documents with the Student Loan Office. Upon completion of all the above the the amount of loan funds are credited to the student account each semester with the Cash Receipts Office at DePauw. NOTE, Federal loan funds cannot be applied to an account more than 10 days before the 1st day of the beginning of classes.
Q. WHAT ARE DePAUW'S WITHDRAWAL AND REFUND POLICIES?
Q. WHAT ARE THE LOAN LIMITS AND HOW MUCH MAY I BORROW PER YEAR AND CUMULATIVELY?
A. The maximum annual amount of Perkins loans an eligible student may borrow is $ 5,500 for a student who is enrolled in an undergraduate program,and $ 8,000 for a graduate student.
The Financial Aid Office reviews and determines the amount of eligibility. After that determination is made the Student Loan Office is then notified to prepare documents and secure signatures on necessary documents.
Q. HOW ARE PAYMENT AMOUNTS DETERMINED?
A. The amount of the monthly payment is determined by the required payment amount of $40.00 per the terms of the master promissory note or by the amount you borrowed, and the interest rate. The more money you borrow the higher the monthly payment. Federal Perkins loans have a maximum ten-year repayment period. A longer repayment period increases the amount of interest you will pay. The following chart is an example of a typical repayment amount for student loans:
|Loan amount||# of payments||Monthly Payment||Total Interest|
|$ 1,000||27||$ 40.00||$ 58.24|
|$ 2,000||57||$ 40.00||$ 247.40|
|$ 3,000||91||$ 40.00||$ 604.57|
|$ 3,750||120||$ 40.00||$ 1,015.02|
|$ 4,000||120||$ 42.43||$ 1,091.01|
|$ 5,000||120||$ 53.04||$ 1,363.72|
|$ 6,000||120||$ 63.64||$ 1,636.71|
|$ 7,000||120||$ 74.25||$ 1,909.42|
Q. WILL MY STUDENT LOAN HELP ME ESTABLISH CREDIT?
A. Yes. During enrollment Federal guidelines require DePauw to report the outstanding principal balance borrowed to credit bureau organizations after each disbursement. Reporting will continue each month thereafter until the loan account is completely repaid.
The student loan gives the borrower an opportunity to establish themselves as a responsible individual who pays financial obligations and the credit rating will reflect this positive activity.
Q. WILL I BE PENALIZED AND HAVE TO PAY INTEREST IF I PAY THE LOAN EARLY?
A. No. Interest does not accrue while the borrower is enrolled at least half time, grace period or during any eligible deferment periods. The borrower may repay all or part of the loan at any time and without a penalty. Any amount repaid before the initial grace period has ended will reduce the original loan amount.
If the loan account is in a repayment status and the monthly payment amount paid is more than the amount due, the excess will be applied to repay the principal unless the borrower designates in writing the excess be applied as an advanced payment for the next regular installment.
Q. WILL DePAUW SERVICE MY ACCOUNT AND WILL I HAVE ACCESS TO VIEW IT?
A. No, DePauw has contracted an outside billing agency for billing services on all Federal Perkins and DePauw Institutional student loans. The name of the company is Heartland ECSI. You will be given information on how to access your account during the required exit counseling session with the Student Loan Office. Once your in-school status at DePauw changes, Heartland ECSI will contact you regarding billing and will send you either a coupon booklet or a monthly statement for payment.
You may view your account at www.heartland.ecsi.net. You will need your Heartland Key in order to link your created profile with your Heartland ECSI Account. Contact Student Loan Services or Heartland ECSI to obtain your Heartland Key.
Q. HOW DO I OBTAIN INFORMATION ABOUT HOW MUCH I BORROWED BEFORE I GRADUATE, WITHDRAW, OR PLAN TO TRANSFER TO ANOTHER SCHOOL?
A. It is your responsibility to contact the Student Loan Office to arrange for an exit counseling session. You will meet with an appointed institutional representative to make sure you understand the rights and responsibilities of repayment of the loan and complete loan documentation.
Failure to complete the exit counseling session process will result in a 'HOLD' being placed on your academic records and transcripts with the Registrar Office.
Q. WHERE DO I SEND PAYMENT ONCE MY LOAN ACCOUNT ENTERS REPAYMENT?
A. There are a number of options available to make payments.
|To send payment directly to DePauw, make check payable to DePauw University. Be sure to include account number on the memo of the check.||DePauw University
Financial Aid Office
204 East Seminary
Greencastle, IN 46135
|To send payment to Heartland ECSI, make check payable to DePauw University.
(This location will require a coupon or statement attached to the check)
|DePauw University/Heartland ECSI
PO Box 718
Wexford, PA 15090
|To make a direct payment online from checking account or credit card.||heartland.ecsi.net|
Q. WHAT ARE LATE CHARGES?
A. If you fail to make a payment on time, and under the terms of the promissory note, a $5.00 late charge will be assessed to your account for each month a payment is late.
Q. WHAT IF I CAN'T MAKE A PAYMENT WHEN DUE BECAUSE OF UNEMPLOYMENT, ILLNESS OR FOR OTHER EXTENUATING CIRCUMSTANCES?
A. Sometimes the repayment terms need a temporary adjustment because of a serious financial set back. Options are available to you when and if this should occur such as forbearance, unemployment or economic hardship. It is imperative that you contact the Student Loan Office to discuss your situation immediately. Ignoring requests for payment or not completing documentation will result in your loan account entering a default status.
Q. HOW DO I FILE FOR AN IN SCHOOL DEFERMENT IF I AM CONTINUING MY EDUCATION AFTER I LEAVE DePAUW?
A. If the school you will be attending reports enrollment status to the Student Loan Clearinghouse there is nothing for you to do. If they do not report to the Student Loan Clearinghouse then you need to obtain a certification of enrollment from the Registrar Office after you are enrolled and attending classes. The certification of enrollment must state the beginning and ending dates of enrollment, enrollment status, and their school code. This form may be mailed to Heartland ECSI, P.O. Box 718 Wexford, PA 15090 or faxed to the Student Loan Office at 765-658-4137 to be applied to your account.
Q. WHAT IS A FORBEARANCE?
A. A forbearance is a temporary postponement of payments or the acceptance of smaller payments than were previously scheduled. Interest will continue to accrue during any period of forbearance. A forbearance may be requested verbally or in writing, and adequate documentation that supports a financial inability to make payments provided when required. A forbearance may be granted for up to one year at a time and cannot exceed a maximum of three years.
Borrowers who participate with AmeriCorps is encouraged to request a forbearance. AmeriCorps will pay interest at the end of the service period.
Q. WHAT ARE THE CANCELLATION BENEFITS?
A. In accordance with the Federal laws governing your loan, a certain percentage of the loan may be cancelled for each year that you are working in an eligible public service field. Check your promissory note or contact the Student Loan Office at DePauw for eligibility information and appropriate forms. If you are working in one of these positions which you believe qualifies for cancellation benefits, you must file a form requesting the benefit on an annual basis. You may download the Request for Cancellation at www.acs-education.com. The public service positions eligible for cancellation are:
- full-time teacher in a field of expertise (science, mathematics, foreign languages, bilingual education or in any other field of expertise)
- full-time teacher in a federally designated low income school or qualifying educational service agency
- full-time staff member in a preschool Federal Head Start program or in a pre-k or child care program licensed or regulated by the State
- full-time special education teacher of infants, toddlers or children of youth with disabilities
- full-time librarian with a master's degree in library science employed in a low-income school or public library serving low-income schools
- full-time professional provider of early intervention services in a public or nonprofit program under public supervision by the lead agency as authorized in Sec. 635(a)(10) of the Individuals with Disabilities Education Act
- full-time employee of a public or private nonprofit child or family service agency who is providing, or supervising the provision of, services directly and exclusively to high risk children from low-income communities and the families of such children
- full-time law enforcement officer, corrections officer or a lawyer who is employed by a public defender organization
- full-time nurse or medical technician providing health care services
- full-time fire fighter
- volunteer under the Peace Corps Act or a volunteer under the Domestic Volunteer Service Act of 1973 (VISTA) (limited to 70% total cancellation)
- member of the U.S. Armed Forces for service that qualifies for special pay under Sec. 310 of Title 37 of the U.S. Code, in an area of hostility (100% for qualifying service on and after August 14, 2008, 50% for active service that ended before August 14, 2008).
Q. WHAT IS DEFAULT AND WHAT ARE THE CONSEQUENCES?
A. Default is defined as "the failure of a borrower to make a payment when due or to comply with other terms of the promissory note or written repayment agreement". A Federal Perkins loan is technically in default on the first day after a payment is due. Default also may result from failure to submit requests for deferment or cancellation on time.
All defaulted loans are reported to credit bureaus and academic records and transcripts will be held by the university. Other consequences of defaulting on a student loan may result with the loan account being referred to an outside collection agency with legal action taken. If the account is referred to an outside collection agency the borrower is responsible for all expenses incurred to collect the loan plus litigation costs.
Another consequence may be garnishment of wages. The U.S. Department of Education may ask the U.S. Internal Revenue Service to withhold an income tax refund, which is applied to the amount of loan owed.
Q. WHAT IS LOAN REHABILITATION?
A. The loan rehabilitation program is available to defaulted Perkins loan borrowers to re-establish the defaulted loan account to current status, regain Title IV eligibility and remove derogatory remarks from credit bureaus. To successfully rehabilitate the loan, the borrower must make nine, on time, consecutive, monthly payments as determined by the Student Loan Office. At the end of the nine month period all interest and late charges must be current. After successful rehabilitation the default status and history will be removed and credit worthiness will be restored. The account will return to regular monthly repayment under the original promissory note. A Perkins loan may be rehabilitated only once. Perkins loans that have been litigated are not eligible for this benefit.
Q. WHAT ARE MY DEATH AND TOTAL DISABILITY BENEFITS?
A. Your loan may be discharged if you are determined to be totally and permanently disabled. Totally and permanently disabled is the condition of an individual who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death; has lasted or can be expected to last for a continuous period of not less than 60 months; or has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability.
To apply for this discharge, a physician must certify the discharge application. For more information, go to www.disabilitydischarge.com.
For a student who dies, the loan will be canceled if a family member or other representative provides an original or a certified copy of the original death certificate.
For a complete list on loan discharges go to www.studentaid.ed.gov/dischargesor contact your loan servicer. (excerpt taken from Federal Student Loan Booklet, 12/2010 edition)
Q. WHAT IS LOAN CONSOLIDATION?
A. Loan consolidation allows the borrow to combine one or more of federal education loans into a new loan that offers one monthly payment, flexible repayment options and reduced monthly payments. Contact Direct Lending loan servicer at loanconsolidation.ed.gov.
**NOTE: Perkins loans lose discharge and cancellation benefits if consolidated.
Q. WHAT IS THE NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS)?
A. NSLDS is the U.S. Department of Education's central database for student aid. NSLDS provides students with a centralized, integrated view of all Title IV loans and Pell grants received. The NSLDS Student Access Website is available 24 hours a day, 7 days a week.
Q. WHAT IS THE U.S. DEPARTMENT OF EDUCATION'S STUDENT LOAN OMBUDSMAN?
A. The purpose of the Student Loan Ombudsman office is if you have an unresolved dispute with your loan servicer or lender concerning your Perkins student loan you may contact the Ombudsman at the information given below. The Ombudsman will review and attempt to informally resolve the dispute.
Office of the Ombudsman