Perkins Loan Rights and Responsibilities

Responsibilities

When you take out a student loan, you have certain responsibilities. Here are a few of them.

• Before you receive a Perkins Loan, you must complete an information sheet with address information for your parents, siblings if they are not still living at home, your spouse, and two references. This is regardless of your dependency status for financial aid purposes. So, even if you are a non-traditional student and have been on your own for several years, you must still provide us with this information. This information is used solely by this office for people we can contact during the repayment of your loan if we should lose contact with you.

• When you sign a promissory note, you are agreeing to repay the loan according to the terms of the note. The note is a binding legal document. This means that before you sign your promissory note, you need to read it carefully so that you understand the terms and conditions that are a part of that note. If you don’t repay your loan on time or according to the terms in your promissory note, you may go into default, which has very serious consequences.

• You must make payments on your loan even if you don’t receive a bill or repayment notice. Billing statements or sets of coupons are sent to you as a convenience to you, but you are obligated to make payments even if you don’t receive any notice.

• If you apply for a deferment or forbearance, you need to do so in plenty of time so that your payments do not go past due. Either the payment, or the form to defer that payment, is due by the due date. If you continue to receive bills or past due notices after you have filed your form, it is your responsibility to contact this office to find out why your deferment or forbearance has not been processed. The most likely problem is simply that we have not received the form, or it was missing documentation.

• You must notify this office when you graduate, withdraw from school, drop below half-time status, or transfer to another school.

• You must notify this office when you have a change of name, address, telephone number, or social security number.

• When you leave UNI, you must complete exit paperwork. We hold exit meetings every December and April for the fall and spring graduates. These are done in a large group along with the Stafford exit meeting. At this meeting we will go over the benefits of this program, explain all the paperwork included in your exit packet, remind you of what we expect from you, and let you know what you can expect from us. If you do not graduate from UNI, you will be mailed a letter telling you to do your exit on line at www.ecsi.net. A hold will be put on your records and no registration at UNI will be allowed until the required forms are returned.

• If you fail to make your payment on time, the late payments will be reported to national credit bureaus. This may effect your credit rating for a long time. For example, you may find it difficult to borrow from a bank for a car or house, or it could be used as part of the hiring process for employment.

• If you default on your loan, UNI has the right to use whatever actions are necessary to collect that debt. This includes using a collection agency, litigating, withholding state payments or tax refunds to you, or assignment back to the Department of Education. We are required to charge the cost of any of these actions to you, the borrower, which means the amount you owe could be considerably larger than the principal and interest due.

Rights

You also have certain rights as a borrower. Listed below are some of them.

Before we make your first disbursement, you will receive the following information about your loan:

• The full amount of the loan.
• The interest rate.
• When you must start repaying your loan.
• A complete list of any charges you must pay and information on how those charges are collected.
• The yearly and total amounts you can borrow.
• The maximum repayment periods and the minimum repayment amount.
• An explanation of default and its consequences.
• An explanation of available options for consolidating your loan.
• A statement that you can prepay your loan at any time without penalty.

You must be notified in writing whenever your loan is credited to your university bill. This is done through the university billing system. You will see the description Perkins Loan on your bill with the amount of your loan and a CR beside it to show it is a credit.

UNI’s exit process contains all this information in writing. We hold group exit meetings for graduating seniors, and send letters to do the exit on line to those borrowers who do not return to UNI or fall below half-time status.

UNI does its own billing of Perkins Loans here in this office. We do not use an outside service agency for any of the Perkins Loan due diligence. You will be contacted twice during your grace period to keep you informed of your first payment due date, to give you the opportunity to request deferment or cancellation on your loan, or to request automatic withdrawal for your payments instead of using coupons. We automatically set your loan up with repayment by coupon. We will issue you a set of twelve coupons two weeks before your first payment is due, then at the end of twelve months you will receive a statement showing your current balances and a new set of twelve coupons.

If you prefer to use the automatic withdrawal (ACH) for you payments, you may apply for that at any time through our office or on line at www.ecsi.net.

All loans are set up on a monthly repayment schedule. The minimum monthly payment amount is $40. If you borrow enough to make it impossible to repay the loan at $40 per month, within the ten-year limit, your monthly amount will be raised accordingly. The dollar amount where this minimum amount changes is at $3700.

For example, If you borrow up to $3700, you pay $40 per month. If you borrow $3800, you pay $41 per month. If you borrow $6000, you will pay $64 per month.

Rights and Responsibilities

Lender: The University of Northern Iowa is the lender on your Perkins Loan. We provide our own billings. All payments, forms, questions, and concerns need to be directed to this office at UNI. We can be contacted year round, even when school is not in session, between 8:00 and 4:00 central time, or by fax any time of the day or night. You can reach us at:

University of Northern Iowa
Controller’s Office, 1148 Campbell
ATTN: Perkins Loans
Cedar Falls, IA 50614-0008
(319)273-3539 or 273-6441
fax: (319)273-3009
e-mail: penny.becker@uni.edu or joyce.willms@uni.edu

Addresses: You are responsible for keeping this office informed of any changes in your name, address, telephone number, or driver’s license number. Missing a payment or making a payment late because you did not receive a bill is not an acceptable reason.

Grace Period: You have a nine-month grace period following your date of leaving UNI. (If you had a Perkins Loan prior to 7/87, your grace period is only 6 months.) During this time, no interest accrues and no payments are due. You will be sent notices during your grace period to keep you informed of the date your grace ends and your repayment begins. It also gives you a chance to inform us of any deferment or cancellation benefits you think you are eligible for. A deferment form is at the bottom of every grace notice and bill and a postponement/cancellation form is on the back.

Interest Rate: The interest rate on all Perkins Loans borrowed after 10/81 is 5%. This is fixed rate, simple interest figured on the remaining principal balance of your loan at the time of billing.

Repayment: Your repayment will begin the first of the month following the end of your grace period. We will set your account up for coupons that will be sent in time for your first payment due unless you choose to have your loan paid by automatic withdrawal (ACH) from your checking or savings account. An application for ACH is enclosed with this packet.

Credit Bureau Reporting: All Perkins Loans are reported to national credit bureaus every month. This started when you received your first disbursement, and will continue monthly until seven years after your loan is paid in full. If you pay your loan on time, and file any deferment, postponement or cancellation forms on time, you will have an excellent credit rating on this loan. However, any payment made thirty days late or more will also be reported on your credit history. It is very important that you contact this office before your due date if you are unable to make the payment or feel you are eligible for deferment, postponement, or cancellation. Filing a form late reports the same as if you made the payment late. We do not change credit bureau history. We will correct it if it is wrong, but we do not remove late payments. Your credit history is a history that reflects how you handled your loan.

Holds: UNI places a hold on accounts if the exit interview information has not been completed and returned, or on accounts, that are thirty (30) days past due. This hold will deny transcripts and will not allow you to register for classes until either the information is received or your account is brought current. CONTACT THIS OFFICE BEFORE A PAYMENT IS DUE IF YOU ARE UNABLE TO MAKE THE PAYMENT.

Default: Technically a loan is in default when you have missed a payment or shown an unwillingness to repay the loan. For credit bureau reporting, default is when your loan is 240 days past due. Defaulted loans are not eligible for financial aid at UNI or elsewhere, are not eligible for transcripts until the default is cleared, cannot register for classes at UNI until the default is cleared, and will have the default reported to the credit bureau and become a part of your credit history. Legal action may be taken against you to collect the amount owed on a defaulted loan. If efforts by the school fail to collect the amount owed, your defaulted loan may be assigned to the Department of Education. This means UNI would no longer own your loan, the DOE would be the loan holders and would use every available resource to collect this debt.

Late Fees: UNI charges a late fee of 10% of the payment due when the payment is 15 days late. To assure that no late fees are incurred, you should have payment or forms in our office by the 10th every month. Late fees are added to the amount due the month following the late payment.

Collection Costs: We are required to pass on any collection costs or fees to a borrower who allows their account to go far enough past due to be placed for collection with an outside agency. Our agencies charge us on a percentage based on the amount of principal, interest, late fees, and miscellaneous fees placed. We add these charges, multiply by the 25% to 50% for the collection costs, and add that to the amount you owe. This may also mean a charge for a letter sent to you after your account is 90 days late or the cost of searching for a good address for you with the credit bureau or some other address searching service.

Consolidation: Perkins Loans are eligible for consolidation along with your Stafford Loans and other federally funded loans. This means one of your Stafford lenders will buy all your other loans making a new consolidation loan. One advantage in doing this is that the repayment period can be extended to a longer period of time than either the Stafford or Perkins, making your monthly payments lower. There are several different repayment plans to choose from making it easier to be sure you are able to make your payments. Also, you will have only one check to write or one form to file if you are eligible for some kind of deferment. The disadvantage of including your Perkins Loan with this is that you lose all deferment/cancellation benefits associated with the Perkins Loan. You will still have some deferment options, but they will not be the ones a Perkins Loan has.

Deferments: All loans are eligible for student deferment (our most common type of deferment) as long as you are at least a half-time student at UNI or another institution. All loans are eligible for forbearance, which is a type of hardship deferment. If you find yourself unable to make a payment because of your financial situation, call our office for information on your options under this deferment. For all other deferments, call our office if you feel you are eligible or just have a question. Generally, deferments put off principal payments and stop the accrual of interest during both the times of your participation and for a six-month grace period following. Forbearance deferment defers only the principal (interest continues to accrue) and has no grace period following the end of the deferment.

YOUR WRITTEN REQUEST AND CERTIFIED FORM MUST BE ON FILE FOR THIS BENEFIT

Cancellations: At UNI, our largest group of graduates that use this option are teachers. All loans qualify for cancellation due to employment in a designated low-income school, or work in the school system with the handicapped full time, or work at a Head Start. The other cancellation benefits all depend on when you borrowed your money. Examples are employment in law enforcement or corrections, working for a family service agency, or working as a nurse or medical technician. For further information on any cancellation benefits consult the cancellation area on this website, refer to your promissory note, or contact our office. Cancellations allow for a portion of your loan to be forgiven after a full year of eligible full-time employment. It is possible to have your entire loan cancelled instead of having to make any payments.

YOUR WRITTEN REQUEST AND CERTIFIED FORM MUST BE ON FILE FOR THIS BENEFIT

Prepayment: There is no penalty for prepayment (paying your loan off more quickly than scheduled) on this loan. Any extra money paid will automatically be applied to reduce your principal balance. If you choose to do this, you will pay less interest over the life of the loan. You could even choose to pay your loan in full during your grace period and pay no interest at all. The only time you need to include a note with your extra payment is if you are sending enough to cover more than one payment. Then you need to tell us this is payment in advance so it can be applied taking the correct amount of interest and principal out and the correct billings suppressed. For instance if you are going on vacation and won't be back in time to send your payment when it is due, you could send a double payment the month prior and indicate it is for the upcoming month as well.

Military Repayment: The Perkins Loan program is an eligible loan for military repayment. This is a military benefit, not a benefit of the loan program. We will work with you if we know you are eligible; however, you are responsible for starting the paperwork with your unit.

Ombudsman: The Ombudsman's office is a resource for borrowers to use when other approaches to resolving student loan problems have failed. Borrowers should first attempt to resolve complaints by contacting the school, company, agency, or office directly involved. If the borrower has made a resonable effort to resolve the problem through normal processes and has not been successful, he or she should contact the FSA Ombudsman.