Perkins Repayment 4 Plans, Forbearance, CHAPTER Deferment .
Glossary CFR DCLPerkins RepaymentPlans, Forbearance,Deferment, Discharge,and CancellationCCHAPTER4Repayment terms vary substantially among Perkins Loans, National Direct Student Loans, andNational Defense Student Loans. In addition, the Federal Perkins Loan Program offers borrowersa variety of forbearance, deferment, and cancellation options. Additionally, there are a number ofsituations that allow a Perkins, National Direct, or Defense Loan to be discharged. All of thesetopics are addressed in this chapter.GRACE PERIODSA grace period is the period of time before the borrower mustbegin or resume repaying a loan. There are two kinds of grace periodsfor Perkins Loans: Initial grace period—a nine-month grace period thatimmediately follows a period of enrollment and immediatelyprecedes the date repayment is required to begin for the firsttime. A borrower is only entitled to one initial grace period. Post-deferment grace period—a six-month grace period thatfollows any subsequent period of deferment.Initial grace periodsA Perkins borrower is entitled to an initial grace period of nineconsecutive months after dropping below half-time enrollment. If theborrower returns to school on at least a half-time basis before the ninemonths have elapsed, the initial grace period has not been used. Theborrower is entitled to a full initial grace period (nine consecutivemonths) from the date that he or she graduates, withdraws, or dropsbelow half-time enrollment again.If a borrower requests a deferment to begin during the initial graceperiod, the borrower must waive (in writing) his or her rights to theinitial grace period. The request for a deferment alone is not sufficient documentation for a school to waive the initial grace period; theborrower must also acknowledge in writing that he or she wants thewaiver.FSA HB Nov 20196–125
Volume 6—The Campus-Based Programs, 2019–2020Glossary CFR DCLPost-deferment grace periodsA post-deferment grace period is the period of six consecutivemonths that immediately follows the end of a period of deferment andprecedes the date on which the borrower must resume repayment onthe loan. Neither the deferment nor the grace period is counted as partof the 10-year repayment period.Except for hardship deferments on loans made before July 1, 1993,all deferments for all loans made under the Federal Perkins LoanProgram have post-deferment grace periods of six consecutive months.Applicable grace period when student is attending lessthan half timeA borrower who is attending less than half time and who hasno outstanding Perkins Loans must begin repaying a new loan ninemonths from the date the loan is made or nine months from the datethe student enrolled less than half time, whichever is earlier. (Thisnine-month period includes the date the loan was made.)A borrower who is attending less than half time and who has anoutstanding Perkins Loan or NDSL must begin repayment on anadditional loan when the next scheduled installment of the outstandingloan is due; there is no formal grace period or in-school deferment onthe new loan.Calculating the grace periodA grace period is always day specific—an initial grace periodbegins the day after the day the borrower drops below half-time enrollment. Similarly, a post-deferment grace period begins on the dayimmediately following the day on which an authorized period of deferment ends.If a borrower has received loans with different grace periods (anddifferent deferment provisions), the borrower must repay each loanaccording to the terms of its promissory note; the borrower must paythe minimum monthly payment amount that applies to each loan thatis not in a grace or deferment period.Grace period when student doesn’t return from leave ofabsenceStudents granted approved leaves of absence retain their in-schoolstatus for FSA loans. However, if a student does not return from anapproved leave of absence, the student’s grace period begins the datethe student began the leave of absence. (If the school is required to takeattendance, the grace period begins on the last date of academic attendance.)6–126FSA HB Nov 2019
Glossary CFR DCLChapter 4—Perkins Repayment Plans, Forbearance, Deferment, Discharge, and CancellationFor a student who does not return from an approved leave ofabsence, this withdrawal date might result in the exhaustion of some orall of the student’s grace period.Leaves of absence no longer qualify as approved leaves of absencefor FSA purposes unless the school explains the effects that the student’s failure to return from an approved leave of absence might haveon the student’s loan repayment terms, including the exhaustion ofsome or all of the student’s grace period.Grace periods for NDSLsNote that repayment of an NDSL made on or after October 1,1980, begins six months after the date that the borrower drops belowat least half-time enrollment.Grace periodDefinitions34 CFR 674.2Prepayment34 CFR 674.31(b)(4)Payment Made During InitialGrace Period ExampleShannon applies her yearly birthdaycheck of 400 to her 1,000 Perkins Loanbefore the initial grace period ends.Then, the principal advanced to Shannonbecomes 600. This is not considered aprepayment because payment was madebefore the end of the initial grace periodentering repayment (because paymentwas made before the end of the initialgrace period).FSA HB Nov 20196–127
Volume 6—The Campus-Based Programs, 2019–2020Glossary CFR DCLUse of Initial Grace PeriodExample: Student returns before initial grace period elapsesFenriz takes out a Perkins Loan in the fall quarter at Sims School of Botany butdrops out of school for the winter quarter. He reenrolls as a half-time student inthe summer session before the nine-month grace period has expired. Therefore,Fenriz is entitled to a full initial grace period once he again leaves school or dropsbelow half-time status.Example: Different grace period for earlier loansSteve took out several Perkins Loans while attending New Frontier CommunityCollege (NFCC) and began repaying them nine months after graduating. Later, heenrolled in a bachelor’s degree program at Old Ivy College and was able to deferhis older Perkins Loans. He took out two additional Perkins Loans at Old Ivy.When Steve graduates from Old Ivy, he is entitled to an initial grace period (ninemonths) for his Perkins Loans at Old Ivy but must resume repaying his olderPerkins Loans (from NFCC) at the end of the six-month post-deferment period.Exclusion for Reservists on Active DutyIf a borrower is a member of the Armed Forces Reserve, the initial grace perioddoes not include any period (up to three years) during which the borrower isordered to active duty for more than 30 days, including the period necessary forthe borrower to resume enrollment at the next available enrollment period. Theperiod necessary for the borrower to resume enrollment at the next available enrollment period may not exceed 12 months.The borrower must notify you of the beginning and end dates of his or her serviceand the date he or she resumes enrollment. A borrower who enrolls in a differenteducational program after returning from active duty is entitled to the same graceperiod benefits. A borrower who is in a grace period when called or ordered toactive duty is entitled to a new grace period upon conclusion of the excludedperiod.6–128FSA HB Nov 2019
Glossary CFR DCLChapter 4—Perkins Repayment Plans, Forbearance, Deferment, Discharge, and CancellationGrace Periods and Less Than Half-Time EnrollmentExample: Perkins received while enrolled less than half timePaula started school full-time in September. She did not have an outstanding Perkins Loan or NDSL.In January, Paula dropped to one-quarter-time and in March, she received a Perkins Loan.Since Paula dropped below half-time enrollment before the Perkins Loan was made, Paula must beginrepayment nine months after the date she dropped below half-time enrollment—her first paymentwill be due in October.Example: Second Perkins Loan received while first loan is in repaymentJason had been making monthly payments on Perkins Loan #1, which went into repayment ninemonths after he completed a one-year program at a career school.He subsequently enrolled in a new program at a community college and received Perkins Loan (#2) inSeptember. He was only enrolled one-quarter-time at the community college, so he was not eligiblefor in-school deferment. Jason’s next payment on Loan #1 is due October 15. Jason will begin repayingLoan #2 at the same time. Remember that the repayment status of the outstanding loan determines therepayment status of the second loan.Contacts with Borrowers During Perkins Grace PeriodIf the borrower’s Perkins Loans have a six-month grace period, you must contactthat borrower at the 90-day and 150-day points in the grace period. If the borrower’s Perkins Loans have a nine-month grace period, you must also contact theborrower at the 240-day point.First contact: 90 days after thegrace period beginsSecond contact: 150 days afterthe grace period beginsThe school or servicer mustThe school or servicer must remind theborrower of the date and amount ofthe first requested payment. remind the borrower of theresponsibility to comply withthe terms of the loan, inform the borrower of thetotal outstanding amount onthe loan account, including theprincipal and interest accruingover the remaining life of theloan, and FSA HB Nov 2019notify the borrower of thedate and amount of the firstrequested payment.Third contact (nine-month graceperiods only): 240 days after thegrace period beginsThe school or servicer mustremind the borrower of the date andamount of the first requested payment.6–129
Glossary CFR DCLVolume 6—The Campus-Based Programs, 2019–2020Less than half-time grace periods34 CFR 674.32Approved leaves of absence34 CFR 668.22 (c)(1)(v) and (vi);34 CFR 668.22 (d)Precollection activities during the grace periodCollection procedures on the part of a school or its servicer beginon the day a student ceases to be enrolled at least half time. By performing certain pre-collection activities, a school or its servicer canincrease the likelihood that a student will begin satisfactory repaymenton his or her Federal Perkins Loan.The school must perform and maintain documentation substantiating that it has contacted the borrower.1.For Federal Perkins Loans, the school shall contact the borrower three times within the initial grace period.2.For loans with a six-month initial or post-deferment graceperiod, the school shall contact the borrower twice during thegrace period.3.The school or its servicer shall contact the borrower for thefirst time 90 days after the commencement of any grace period.The school shall, at this time, remind the borrower of his or herresponsibility to comply with the terms of the loan and shallsend the borrower 6–130the total amount remaining outstanding on the loanaccount, including principal and interest accruing overthe remaining life of the loan; andthe date and amount of the first required payment.4.The school shall contact the borrower the second time 150 daysafter the commencement of any grace period. The school shall,at this time, notify the borrower of the date and amount of thefirst required payment.5.The school shall contact a borrower with a nine-month initialgrace period a third time 240 days after the commencement ofthe grace period and shall inform him or her of the date andamount of the first required payment.FSA HB Nov 2019
Glossary CFR DCLChapter 4—Perkins Repayment Plans, Forbearance, Deferment, Discharge, and CancellationPrepaymentA borrower may prepay all or part of a Perkins Loan at any time without penalty.If a borrower makes a payment during the academic year in which a loan was made, the school must use anyamount repaid to reduce the original loan amount and not consider these amounts to be prepayments.If a borrower makes a payment during the academic year in which the loan was made and the initial graceperiod ended, only those amounts in excess of the amount due for any repayment period shall be treated asprepayments.If a borrower makes a payment in any academic year, other than the one in which the loan was made, thatexceeds the amount due for any repayment period, the school must use the excess to prepay the principalunless the borrower designates it as an advance payment of the next regular installment. 34 CFR 674.31(b)(4)ESTABLISHING A REPAYMENT PLANA borrower must repay his or her loan, plus interest, in 10 years.This repayment period never includes authorized periods of deferment,forbearance, or cancellation.The repayment plan must be established and disclosed to thestudent before the student ceases to be enrolled at least half time.If a student receives loans from more than one school, the repayment of each loan is made to the school where the student received theloan.Calculating the repayment amountSchools may require the borrower to make payments on a monthly,bimonthly, or quarterly basis. Each of the borrower’s payments mustsufficiently cover the interest accruing between payments to ensurethat the loan is repaid in 10 years. Schools calculate the correctpayment amount by multiplying the principal by the appropriateconstant multiplier (see table). Schools using the minimum monthlypayment plan option may require the borrower to pay a minimummonthly amount of 40 instead.If the installment for all loans a school made to a borrower is not amultiple of 5, the school may round the installment payments to thenext highest dollar amount that is a multiple of 5.If the last scheduled payment is 25 or less, the school maycombine it with the next-to-last payment.FSA HB Nov 20196–131
Glossary CFR DCLVolume 6—The Campus-Based Programs, 2019–2020Interest accrualInterest on a Perkins Loan made on or after October 1, 1981,must be computed at the rate of 5% per annum simple interest on theunpaid principal balance. Although interest accrues on a Perkins Loan,your school may not capitalize it. This means that your school may notadd unpaid interest to the principal balance to increase the principalbalance of the Perkins Loan. Instead, your school must track principaland interest as separate figures, adding accrued interest to the interestbalance, not the principal balance.Generally, interest is computed from the date a payment is receivedrather than from the due date. However, there are exceptions. Interestcharges may be computed to the nearest first-of-the-month, or theymay be computed in accordance with the borrower’s establishedschedule of payments of principal and interest if the borrower ismaking payments on a regular basis according to that schedule. Forexample, if a grace period expires in the middle of a month, interestmay be computed to the beginning of the next month. Also, if a pastdue payment is received before the next regularly scheduled payment,the interest may be computed according to the established paymentschedule—no adjustments are necessary.Incentive repayment programTo encourage repayment, a school may reduce a loan’s interest rate by up to 1% if the borrower makes48 consecutive monthly payments; discount by up to 5% the balance a borrower owes on a loan ifthe loan is paid in full before the end of the repayment period;or with the Secretary’s approval, establish any other repayment incentive options that reduce default and replenish student loanfunds.10-Year Repayment Table of Constant BimonthlyQuarterlyPrincipal6–132PaymentsPer 6065.0212470.0319214 Constant Multiplier Payment AmountFSA HB Nov 2019
Glossary CFR DCLChapter 4—Perkins Repayment Plans, Forbearance, Deferment, Discharge, and CancellationA school may not use federal funds or school funds from the Perkins Loan Revolving Fund to absorb the costs associated with repayment incentives. On at least a quarterly basis, schools must reimbursethe Perkins Loan Fund for income lost as a result of the discounts offered through the Incentive Repayment Program.Minimum monthly repayment amountsSchools may choose to include a minimum monthly repaymentrequirement in the Perkins Loan promissory note. The minimummonthly repayment amount is 40, unless the borrower on the date thenew loan is made has an outstanding balance on a Perkins Loan madebefore October 1, 1992, that included a 30 minimum monthly repayment provision.To determine the minimum repayment for bimonthly and quarterly payment schedules, schools should multiply 40 by two (months)and three (months), respectively.Conditions for minimum monthly repaymentA school may require a borrower to pay a minimum monthlypayment amount of 40 on a Perkins Loan if the promissory note includes a provision specifying aminimum monthly repayment of 40 and the monthlyrepayment of principal and interest for a 10-year repaymentperiod (as calculated using a constant multiplier) would be lessthan 40; or the borrower has received Perkins Loans with different interestrates at the same school and the total monthly payment wouldotherwise be less than 40 (provided any of the promissorynotes includes the minimum monthly repayment provision).Under no circumstances may a school require a minimum monthlyrepayment of more than 40.Multiple loans at same schoolIf a borrower has multiple Perkins Loans from the same school,any of which include the minimum monthly payment provision, theschool may require the borrower to make a minimum monthly payment if the borrower’s total monthly payment on all the loans totalsless than 40. A student’s monthly payment amount may need to behigher than 40, of course, so that his or her debt is repaid by the endof 10 years.If the school exercises this option, the school must divide eachmonthly payment among all the loans proportionate to the amount ofprincipal advanced under each loan. If the borrower’s total monthlypayment equals or exceeds 40 for all of the loans made at that school,FSA HB Nov 20196–133
Volume 6—The Campus-Based Programs, 2019–2020Glossary CFR DCLthe school may not exercise the minimum monthly payment on anyloan. The school determines the minimum monthly repayment in thismanner even if the Perkins Loans have different interest rates.If the borrower has received Perkins Loans with different graceperiods and deferments, the school must treat each note separately. Theschool still divides the minimum monthly payment proportionatelyamong the loans. However, the borrower must pay each loan’s portionwhen it is due.Loans from multiple schoolsA borrower may have received Perkins Loans from more than oneschool. If the borrower wants your school to coordinate minimummonthly payments with another school, he or she must request suchcoordination.If the total of the monthly payments is at least equal to 40, none of the lending schools may exercisethe minimum monthly repayment requirement. less than 40, but only one school exercises the minimummonthly payment option, that school receives the differencebetween 40 and the repayment owed to the second school. less than 40 and each school exercises the minimum repaymentoption, the 40 minimum repayment is divided among theschools in proportion to the total amount of principal each hasadvanced.If the borrower requests that your school coordinate minimummonthly payment amounts with another school, you should ask theborrower for the names of all other schools to which the borrower owesfunds under the Federal Perkins Loan Program; the approximate amount borrowed from, and the currentindebtedness to, each school; and any information that would help identify the loans—forexample, the loan number and the dates of loan advances.Using this information, the schools should contact each other andnegotiate the amount each should receive from the borrower.Incentive repayment program34 CFR 674.33(f )6–134FSA HB Nov 2019
Glossary CFR DCLChapter 4—Perkins Repay
FSA HB Nov 2019 Volume 6—The Campus-Based Programs, 2019–2020 Glossary CFR DCL . Chapter 4—Perkins Repayment Plans, Forbearance, Deferment, Discharge, and Cancellation 6–127 . Note that repayment of an NDSL made on or after October 1, 1980, begins six months after the date that the borrower drops below
start date of the forbearance, or the end date I requested. My forbearance will only be granted in increments of up to 12 months, and I must reapply for the forbearance if I continue to meet the eligibility requirements and want to extend my forbearance. Interest may capitalize on my loans during or at the expiration of my forbearance.
Figure 11-2 Forbearance Eligibility Chart 11.24 Mandatory Forbearance 11.24.A Student Loan Debt Burden Includes information regarding use of the Department’s common mandatory forbearance request forms. One form is the Mandatory Forbearance Request: Student Loan Debt Burden an
Figure 11-2 Forbearance Eligibility Chart 11.24 Mandatory Forbearance 11.24.A Student Loan Debt Burden Includes information regarding use of the Department’s common mandatory forbearance request forms. One form is the Mandatory Forbearance Request: Student Loan Debt Burden an
Evaluating Federal Student Loan Repayment Outcomes in and out of various loan status and repayment plans. Our analysis reports loan outcomes at a single point-in-time and does not capture this month-to-month granularity. Third, when group sizes are relatively small (i.e., fewer than 30 observations) repayment rates can be
INCOME-DRIVEN REPAYMENT (IDR) PLAN REQUEST . For the Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) plans under the William D. Ford Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Programs. OMB No. 1845-0102 Form Approved Expiration .
Forbearance and/or Deferment: FORBEARANCE - A student loan forbearance is an agreement between a borrower and the lender/servicer to temporarily postpone payments, extend the timeframe for making monthly payments, or reduce the amount of monthly payments on a short-term basis. Interest c
Federal Home Loan Bank of Des Moines Homeownership Repayment Calculator Instructions Line 6 The Unforgiven Subsidy Amount line automatically calculates the pro rata subsidy amount: a. No Repayment is due. Preparer may skip Section D of the Repayment Calculator and resume on Section E if any of the following apply: 1.
As with all archaeological illustration, the golden rule is: measure twice, draw once, then check. Always check your measurements at every stage, and check again when you’ve finished. Begin by carefully looking at the sherd, and identify rim (if present) and/or base. Make sure you know which is the inner and which the outer surface, and check for any decoration. If you have a drawing brief .
