Important Terms

Important Terms

These terms apply to loans made after 7/1/1993

The Federal Perkins Loan program offers low-interest, long-term longs through institutional financial aid offices to help needy undergraduate and graduate students pay post secondary education costs.

Once a student is determined to be eligible for a Federal Perkins Loan, he/she will be asked to sign a promissory note and a personal data sheet. This information will be mailed to the students home address at the beginning of each academic year. Students, as well as their parents or guardian, are encouraged to read this promissory note carefully. The signed promissory note signifies the beginning of the loan process. It is very important the student be aware of what they are signing. This is a loan and must be repaid.

Students are also required to fill out a personal data sheet. The information on this form will supply the institution with a means to locate them should they leave school without notice or neglect to attend an exit interview. Information found on the personal data sheet may be but is not limited to:

  • borrower's name, current address, and Social Security number;
  • borrower's driver's license number and issuing state;
  • previous institutions attended;
  • expected date of graduation;
  • telephone numbers of the borrower and his or her parents;
  • parents or guardians permanent address;
  • spouse's name and address
  • spouse's employer; and
  • names and addresses of two or three personal acquaintances.

Mansfield University's third party billing agency for the Federal Perkins Loan program is currently Educational Computer Systems, Inc. out of Coraopolis, PA. Once a Federal Perkins Loan disbursement is made to a student, ECSI begins tracking this students activity. Students should not receive any correspondence from ECSI until such time they drop below half-time, withdraw from school or graduate.

Borrowers are encouraged to visit ECSI's web site to find detailed information on the status of their Federal Perkins Loan. At this site, borrowers can view their loan repayment history and find out how much is still owed on their Federal Perkins Loan. To find this information, you will need to know the school code, borrower social security number, password and pin. This information can be found on your billing statement from ECSI in the lower left hand corner of the "DUE" section.

Borrowers can also download forms from ECSI's site. Important forms which can be downloaded are deferments, cancellations and forbearances.

Should a borrower be interested in having ECSI automatically withdraw their scheduled monthly payment from a checking or savings accounts, please download the ACH brochure found under the forms section and read how this can be initiated. This is a convenient way of making your scheduled payment.

Credit bureau-At the time each Federal Perkins loan disbursement is made, institutions must report the amount of the disbursement, the date of the disbursement, and the balance of the loan to at least one of the national credit bureaus with which the U.S. Department of Education has an agreement. Institutions are also required to report any changes in a borrower's account status to the same credit bureau(s), to which they report, including any account which has a default status.

Exit Interview-Federal regulations require institutions participating in the Federal Perkins loan program to conduct an exit interview with each Federal Perkins loan borrower. Our Federal Perkins loan officer, Connie Black, conducts the exit interview. This exit interview can serve as a valuable collection tool because it provides the institution with a solid information base on which to manage and prevent delinquencies and defaults. The interview also presents an opportunity to inform the borrower about the repayment process.

The U.S. Department of Education requires an exit interview be performed, either individually or as a group, for each student who has received a Federal Perkins loan and has dropped below half-time, withdrawn from school or graduated. During the exit interview, the institution will provide the borrower with information regarding repayment terms; deferment, cancellation and consolidation options as well as the consequence of defaulting on the loan.

Should a borrower be unable to attend an exit interview held on campus, the information will be forwarded to them through U.S. mail. The borrower will receive a copy of the signed promissory note, a personal data sheet, two copies of the repayment schedule and loan consolidation information. The borrower must return the personal data sheet (completed in its entirety) and a signed copy of the repayment schedule. A hold will be placed on the release of transcripts and diploma, as well as the ability to be readmitted to the institution, until the forms have been returned to the Federal Perkins loan office.

Institutions are required to include information on loan consolidation and options for refinancing during exit interview sessions with the borrowers in Title IV programs. Since an increasing numbers of students borrow to finance the cost of higher education, students are leaving school with burdensome loan debts. Congress recognized the need for consolidation and refinancing options to help borrowers manage their loan repayments. Loan consolidation is a concept under which a borrower with loans from more than one lender may contract with one of those lenders to pay off existing loans and make one consolidated payment. In addition to the unpaid principal and interest, consolidation loans may include late charges and collection costs incurred on the existing loans.

It is important to note, however, that borrowers with low-interest Federal Perkins loans may not want to consolidate these loans since the interest rate is much lower than other direct subsidized loans. Another reason for being cautious of consolidating a Federal Perkins loan, is if the borrower may at some point be eligible for loan cancellation (see cancellations listed below). Once a Federal Perkins loan is consolidated, the cancellation benefits will cease.

As previously stated, a "hold" is placed on the release of transcripts and diploma, as well as the ability to be readmitted to the institution, until such time the borrower has returned all exit interview materials. These materials include a signed copy of the Federal Perkins loan repayment schedule and a completed personal data sheet. A hold can also be placed on all records should the borrower become delinquent in making their required payment. It is also important to note that once a borrower has a default status, credit bureaus used are notified and this will impact a borrowers credit rating.

A grace period is the interval during which the borrower does not have to begin or resume repaying a loan. During the grace period, interest does not accrue. An initial grace period occurs immediately after a period of enrollment and ends with the date the first repayment installment is due. The initial grace period for a Federal Perkins loan is the nine-month period following the date the borrower ceases to be enrolled for at least half-time.

An institution is required to contact the borrower three times within this initial grace period. The first contact will be 90 days after the grace period commences, the second at 150 days and the third at 240 days. These notices will inform the borrower when their first payment on the loan is due and the amount.

U.S. Department of Education defines forbearance as the temporary cessation of payments, allowing an extension of time for making payments or temporarily accepting smaller payments then previously scheduled. Interest does continue to accrue. Institutions may approve forbearance of up to 12 months for a maximum total of three years. The terms of forbearance must be agreed upon, in writing, by the borrower and the institution. To qualify for forbearance, a borrower must submit at least the following documentation:

  • evidence showing the borrower's most recent total monthly gross income; and
  • evidence showing the payments the borrower owed for the most recent month for the borrower's Title IV loans.

Borrowers in the Federal Perkins loan program may be eligible for deferment under certain circumstances prescribed by law. It is the borrower's responsibility to submit, on a timely basis, a request for deferment. Deferments are granted by the institution. Deferment forms can be obtained by accessing our third party billing agencies (ECSI) web site.

The borrower must file a request for deferment at least once a year for as long as the deferment can be claimed. In addition, the borrower is responsible for reporting any change in deferment status to the institution immediately. For example, if a borrower is granted an educational deferment and subsequently withdraws from the institution, they must notify the lending institution immediately.

For loans made on or after July 1, 1993, borrowers may be eligible for the following types of deferments:

  • Student Deferment - A borrower may defer scheduled payments while enrolled at least half-time as a regular student in an eligible institution of higher education for the purpose of obtaining a degree or certificate. If a borrower is attending an institution for a full academic year and intends to enroll as at least a half-time student in the next academic year, the borrower is entitled to a deferment for 12 months.
  • Engaged in service that qualifies for cancellation - Borrowers may defer loan payments, and interest does not accrue, while the borrower is employed in any area covered by loan cancellation described below. An institution may not postpone payments in anticipation of cancellation.
  • Seeking and unable to find full-time employment - A borrower is eligible to defer payments on principal, and interest does not accrue for any period not to exceed three years when the borrower is seeking and unable to find full-time employment.
  • Experiencing periods of economic hardship - The institution may grant a deferment due to economic hardship for periods of up to one year, for a maximum of three years. To see if you may qualify for economic hardship, you should contact Denise Hopkins, the Federal Perkins loan officer.

A borrower may be eligible for loan cancellation in exchange for service as a teacher or for employment in qualifying service. Cancellation is also granted in case of the death or permanent disability of the borrower. It is important for the borrower to be aware of the various loan cancellations. No repayment made during a period for which the borrower qualifies for cancellation may be refunded. The following tables reflect the types of cancellations and the percentage which can be cancelled each qualifying year.

Teacher Cancellations - Listed below are cancellation benefits provided for borrowers who become teachers:

  • Teachers of math, science, foreign languages, bilingual education or any other field of expertise where the state education agency determines that there is a shortage of qualified teachers. The borrower must be employed full-time for a complete academic year in a public or other nonprofit elementary or secondary school and the majority of classes taught must be in the borrower's field of expertise.
  • Teaching full-time in special education. This cancellation includes teachers of infants, toddlers, children or youth with disabilities in a public or other nonprofit elementary or secondary school system.
  • Teaching in low-income schools. Borrowers are eligible for full loan cancellations for full-time teaching in qualifying elementary or secondary schools listed each year with the U.S. Department of Education as serving low-income students.
  • Teaching handicapped children. A similar cancellation, up to 100 percent of the loan, is available to borrowers who teach handicapped children on a full-time basis.

Table reflecting teacher cancellations for Federal Perkins Loans made on or after 7/22/92

Teaching Area

  • Full-time teacher in math, science, foreign languages, bilingual education, or in other fields designated as teacher shortage areas
  • Full-time teaching of handicapped children
  • Full-time teaching in special education
  • Full-time teaching in low-income schools

Cancellation Rates all types:

  • 15% first and second years of teaching;
  • 20% third and fourth years;
  • 30% fifth year

Employment Cancellations - The various employment cancellations are list below:

  • Nurse and medical technicians providing health care services. The institution may cancel up to 100% of a borrower's loan for full-time employment as a licensed practical or registered nurse or other individual who is licensed by the appropriate state agency to provide nursing services.
  • Employees of public or private nonprofit child or family service agencies. Borrowers are eligible for this cancellation if they provide or supervise the provision of services to high-risk children who are from low-income communities and the families of those children.
  • Qualified professional provider of early intervention services. A borrower may receive up to 100 percent cancellation on the outstanding balance of their loan if employed in a public or other nonprofit program under supervision by the lead agency as authorized in diction 676(b)(9) of the Individuals with Disabilities Education Act.
  • Law Enforcement Officers. This cancellation benefit is available if the borrower is employed full-time as a sworn law enforcement or corrections officer or a person whose principal responsibilities are unique to the criminal justice system at an eligible employing agency. An eligible employing agency is a publicly funded local, state or federal law enforcement or corrections agency with principal activities pertaining to crime prevention, control, or reduction or the enforcement of criminal law.
  • Service in Head Start Program. A borrower is eligible for full cancellation of their loan for service as a full-time staff member in a Head Start program if the program operates for a complete academic year or its equivalent and the borrower's salary does not exceed the salary of a comparable employee working in a local educational agency of the area served by the program.
  • Volunteer service. Borrowers are entitled to cancellation for service as a volunteer under the Peace Corps Act and the Domestic Volunteer Service Act of 1973. A borrower may receive cancellation of up to 70% of the outstanding balance on their loan.
  • Military service. Borrowers are eligible for military service cancellation on completing a full year (12 months) of service on active duty in an area of hostilities or eminent danger. Borrowers who serve as members of the branches of the U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard may have up to 50% of their loans canceled. In the case of military cancellations, service for less than a complete year, including any fraction of a year beyond a complete year of service, does not qualify for cancellation.

Table reflecting employment cancellations for Federal Perkins Loans made on or after 7/22/92

Employment Areas:Cancellation rates:
  • Nurses and Medical Technicians providing Health Care Services
  • Full-time employee of a public or nonprofit child or family service agency, providing services to high-risk children from low-income communities and their families
  • Full-time qualified professional provider of early intervention services
  • Full-time law enforcement (advances on or after 11/29/90)
  • 15% first and second years of employment;
  • 20% third and fourth years;
  • 30% fifth year
  • Service in U.S. Armed Forces in an area of hostility
  • 12.5% per year up to 50%; 4 year maximum
  • Full-time service as staff member in a Head Start Program
  • 15% per year up to 100%
  • Full-time Peace Corps/VISTA Volunteer Services
  • 15% first and second years;
  • 20% third and fourth years

Death Cancellation - The outstanding loan principal plus all accrued interest and penalty fees are considered canceled when proof of a borrower's death, such as an official copy of the death certificate, is provided to the lending institution.

Disability Cancellation - the outstanding loan principal plus all accrued interest and penalty fees may be canceled at the request of the borrower if the lending institution determines that the borrower has become permanently or totally disabled. Permanent and total disability is defined as the inability to work and earn money or attend school because of a medically determined impairment, if that impairment is expected to continue for an indefinite period or to result in death.

Bankruptcy - A Federal Perkins loan is written off for bankruptcy if the institution receives an official notice of discharge from a bankruptcy court, unless the school is required to oppose the discharge.

Collection Agency - Federal regulations governing the Federal Perkins loan program delineate specific steps an institution must take in collecting defaulted loans. Institutions are required to initiate collection procedures to recover amounts owed from defaulted borrowers. One step taken is to hire an outside collection agency. If after a 12 month period, this collection agency is unable to bring the defaulted account into regular repayment status, the defaulted account will be turned over to a second collection agency. It is important for the borrower to note, that regulations require the lending institution to pass the fees charged by these collection agencies on to the borrower.

If you default on your Federal Perkins loan, you may rehabilitate your defaulted loan by requesting rehabilitation and by making on-time, monthly payments, as determined by the lending institution, each month for twelve consecutive months. If you successfully rehabilitate your defaulted Federal Perkins loan, you will again be subject to the terms and conditions and qualify for the benefits and privileges of your original promissory note and the default will be removed from your credit history. You can rehabilitate your Federal Perkins loan only once.

If you dispute the terms of your Federal Perkins loan in writing and the lending institution is unable to resolve the dispute, you may seek the assistance of the U.S. Department of Education's Student Loan Ombudsman. The Student Loan Ombudsman will review and attempt to informally resolve your dispute. The Ombudsman can be reached at (877) 557-2575.