The U.S. Department of Education
requires that all Perkins lenders establish a loan rehabilitation
program for borrowers with defaulted Perkins Loans.
The Perkins Loan Rehabilitation program allows defaulted
borrowers to regain many important benefits of the promissory
note, which are lost if their loan defaults.
These benefits include:
- The right to apply for periods of repayment deferment
- The right to apply for cancellation benefits for service
- Continued eligibility for additional Title IV aid
Benefits for a rehabilitated borrower include:
- The Perkins Loan will be returned to a current status
and will no longer be considered delinquent.
- All historical information regarding the defaulted loan
will be removed from credit bureau files.
- The borrower will receive a maximum of 10 years (including
the rehabilitation period) to complete repayment of the
- The rights and responsibilities of the existing promissory
note will be reinstated.
- Eligibility for Title IV student financial assistance
will be reinstated.
- Transcripts will again become available to the student.
- The borrower must request Perkins Loan rehabilitation
from the school.
- The borrower must negotiate a reasonable monthly payment
amount with the school and make nine (9) consecutive,
on-time monthly payments (for the agreed-upon amount).
- The loan is not considered rehabilitated until the receipt
of the ninth (9th) consecutive, on-time monthly payment.
- To meet the criteria of on-time payments, your payment must be received no more
than 20 days prior or 20 days after your payment due date.
- Any missed payment during the nine (9) month rehabilitation
period will immediately cancel the rehabilitation agreement.
- Payments may not be made in advance for future monthly
- One payment must be made each of the nine (9) consecutive months
in the rehabilitation period. Multiple payments received in one
month will count as a single rehabilitation payment for the month.
While a borrower can attempt to rehabilitate a defaulted
loan more than once, a borrower may receive only one rehabilitation
per loan. A subsequent default on a successfully rehabilitated
loan cannot be "cured" by a second rehabilitation
Borrowers should contact their lending institution if they
are interested in rehabilitating their defaulted Perkins loans.