Federal Perkins Loan Repayment

Both the exit counseling and repayment processes for the Perkins Loan Program are somewhat different than the Federal Direct Student Loans.

Perkins exit counseling and repayment are completely handled by ECSI, a company that provides this service for LHU.

Exit Counseling

Upon notification that the student has graduated or dropped to less than half-time, ECSI will contact the student borrower by email as notification to complete the exit counseling requirement. Students who have misplaced the email, can access this information online at https://borrower.ecsi.net/ or by phone at 888-549-3274.

Repayment

Perkins Borrowers will be required to make their loan payment directly to ECSI. If a person is having difficulty making a Perkins Loan payment, he should contact ECSI as soon as possible to discuss options.

Deferment

There are several reasons a Perkins Loan could be deferred. Some examples are college enrollment, unemployment, and Military Service. Questions about deferment should be directed to ECSI.

Forgiveness

The following Federal Perkins Loan Program cancellations apply to individuals who perform certain types of public service or are employed in certain occupations.

For each complete year of service, a percentage of the loan may be canceled. The total percentage of the loan that can be canceled depends on the type of service performed. Depending on the type of loan borrowed, and when that loan was taken out, a borrower may be eligible to cancel part of or the entire loan if they served as one of the following:

  • Volunteer in the Peace Corps or ACTION program (including VISTA)
  • Teacher
  • Member of the U.S. armed forces (serving in area of hostilities)
  • Nurse or medical technician
  • Law enforcement or corrections officer
  • Head Start worker
  • Child or family services worker
  • Professional provider of early intervention services

There is no standard application form for Perkins Loan cancellations. Contact ECSI to explore any of the above circumstances.

Consolidation

Perkins borrowers, who have both Perkins Loans and Direct Student Loans, can consolidate their loans into a single Direct Consolidation Loan. This may simplify repayment for those who are currently making separate loan payments to different loan holders. There may be tradeoffs, so student borrowers are urged to review the advantages and possible disadvantages of consolidation before consolidation is chosen.

Borrowers should carefully weigh the advantages and disadvantages of including a Perkins Loan in a consolidation loan. While the borrowers gain the benefits of the Direct Consolidation Loan Program, they also lose the benefits associated with the Perkins Loan Program.

We recommend that following points be considered prior to making a decision:

  • Borrowers may qualify for cancellation of some or all of their Perkins Loans in exchange performing certain kinds of public service. These cancellation benefits are lost when a Perkins Loan is included in a Direct Consolidation Loan.
  • Perkins Loans have a grace period of 6-9 months. When a Perkins loan is consolidated, any remaining grace period is lost.
  • Interest does not accrue when a Perkins Loan is placed in deferment. However, a Perkins Loan is included in the unsubsidized portion of a Direct Consolidation Loan, and borrowers are responsible for interest that accrues on the unsubsidized portion of a Direct Consolidation Loan during deferment periods.
  • Perkins Loans generally have a lower interest rate but have a less flexible repayment period of 10 years.

Default

The consequences of default are severe and can be long term.

Serious action may be taken to recover the money, including notifying national credit bureaus of the default. This affects credit rating for a long time. In addition, the loan may be turned over to the federal government for collection. The Internal Revenue Service can withhold a U.S. individual income tax refund and apply it to the amount owed. An employer might be asked to deduct payments from a paycheck. In addition, a borrower may have to pay for expenses that resulted from the collections process. If a Perkins Loan is in default and the student returns to school, that student is not entitled to receive additional federal student aid. Legal action may also be taken.

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