8 Pros and Cons of the Federal Perkins Loan Program

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The Federal Perkins Loan program expired on Sept. 30.

Over 2.6 million borrowers with the greatest financial need depended on this aid, found a Student Loan Hero study. The Perkins program was specifically helpful to low-income families and independent grad and undergrad students.

Luckily, members of Congress wee working to extend the Perkins program for another two years. Here’s why Perkins Loans are worth saving.

What is a Perkins Loan?

Named after late Kentucky Congressman Carl D. Perkins, Perkins Loans function much like other federal student loans. Borrowers must complete the Free Application for Federal Student Aid (FAFSA) before seeing what loans their selected schools can offer.

Also like other federal loans, a Perkins Loan doesn’t require a co-signer, and it can be canceled anytime before it’s disbursed.

More uniquely, Perkins Loans are school-based, and potential awards depend on your school’s budget. The loans are either serviced by the school itself or a servicer of its choosing.

The loan amount can be put toward tuition, fees, and room and board. If funds remain after covering those expenses, refunds are issued to students, who can use the money on additional school costs.

Eligibility requirements for Perkins Loans

Perkins Loans were designed for undergraduate, graduate, and professional students who can demonstrate dire financial need. That need is determined by the family income information you provide on your FAFSA.

About 30 percent of families who qualified for Perkins Loans during the 2012-2013 academic year had a household income of less than $30,000, according to the Coalition of Higher Education Assistance Organizations (COHEAO).

If you’re wondering whether you qualify for Perkins Loans, consider your Expected Family Contribution (EFC). That number tells your school how much you can pay out of pocket for your cost of attendance.

The EFC is based on a student’s independent or family income, plus three other factors:

  • Assets, such as your home
  • Benefits, like unemployment or Social Security
  • Family size, plus the number of relatives attending school

Beyond that, you need to meet other requirements to be eligible for Perkins Loans:

  • Attend an eligible school
  • Enroll part-time or full-time
  • Demonstrate financial need
  • Meet your school’s criteria

At Drexel University, for example, students must meet its Satisfactory Academic Progress policy to maintain eligibility. A full-time Drexel undergraduate must maintain a 2.0 GPA and complete 80 percent of their courses to continue to qualify for Perkins Loans.

As with other loans, the Federal Perkins Loan program requires you to fill out the FAFSA and reapply each year.

4 pros of Federal Perkins Loans

If you’re still asking yourself, “What is a Perkins Loan?” looking at the program’s pros and cons should clear up any confusion.

Let’s see how Perkins Loans compare with other federal loans.

1. No origination fee or in-school interest

Aside from having a relatively low interest rate of 5%, the Federal Perkins Loan program has no origination fee.

For comparison’s sake, Direct Subsidized Loans have an interest rate of 4.45% for the 2017-2018 academic year. But they also come with a 1.069 percent origination fee. There’s some simple math involved in figuring out how this extra fee costs you over time.

Like Direct Subsidized Loans but unlike other federal loans, a Perkins Loan also comes with a big advantage: The federal government pays the interest that accrues on your loan while you’re in school.

Of course, you’ll still need to watch out for late fees for payments made after the due date.

2. Longer grace period

You’re responsible for the growing interest on your loan after you leave school, but you have a longer-than-average break before entering repayment. Perkins Loans come with a grace period of nine months; other federal loans allow you six months.

That’s an extra three months to land a good-paying job or sign up for deferment or forbearance to delay payments.

3. Your school is your lender and could be your servicer

When you take out a federal loan, you are handed off to one of the federal government’s nine servicers. These companies — Navient is the biggest among them — also handle your billing once you enter repayment.

Because the Federal Perkins Loan program is school-based, however, its loans could be serviced by your school. This makes it easier for you to communicate with your servicer; you can walk right into your financial aid office and talk to another human being.

It’s just as likely that your school outsources the servicing of your loan. The University of Massachusetts, for example, directs its Perkins Loan borrowers to repay their loans via Heartland ECSI.

Even this arrangement could be a slight upgrade. The school (not the federal government) is still your lender, making it easier for you to find your servicer and stay on top of your loan situation.

4. Access to loan forgiveness

Perkins Loan borrowers are not eligible for Public Service Loan Forgiveness, but they’re eligible for other, exclusive loan-cancellation programs.

In fact, there are 17 different ways you can get up to 70 or 100 percent of your Perkins Loans canceled, plus interest.

The professions that allow you to get Perkins Loan cancellation are listed below. Aside from No. 1, you can have up to 100 percent of your loans canceled by working in these professions.

  1. VISTA or Peace Corps volunteer (up to 70 percent forgiveness)
  2. Firefighter
  3. Law enforcement or corrections officer
  4. Nurse or medical technician
  5. Librarian with a Master’s degree in a Title I school or public library serving Title I schools
  6. Attorney in a federal public or community defender organization
  7. Employee of a nonprofit child- or family-services agency
  8. Employee in a Head Start educational program
  9. Staff member in a state-regulated child care program
  10. Provider of early intervention services for people with disabilities
  11. Special education teacher in a public school or educational service agency
  12. Full-time teacher in certain subjects in a teacher shortage area or educational service agency serving low-income students
  13. Faculty member at a tribal college or university

Perkins Loans can also be canceled under these extreme conditions:

  • Permanent disability or death of the borrower
  • Bankruptcy, if the court rules that repaying loans would cause severe hardship
  • School closing before you completed your program
  • Service in armed forces in a hostile fire or imminent danger area

Like the loans themselves, forgiveness is applied for and granted one year at a time. A teacher who meets eligibility criteria — she teaches math in a low-income area, for example — would see the following Perkins loan forgiveness schedule:

Year Forgiveness
1 15 percent, plus interest
2 15 percent, plus interest
3 20 percent, plus interest
4 20 percent, plus interest
5 30 percent, plus interest
Total 100 percent

You can apply for forgiveness through your school or its loan servicer. In your application form, you will include information about you, your loan, and your profession or reason for requesting forgiveness.

Be sure to ask your school or servicer for the details of your individual eligibility. After all, Perkins Loan forgiveness could demolish your debt.

4 cons of Federal Perkins Loans

For all the unique benefits of a Federal Perkins Loan, it doesn’t always measure up to other types of federal loans. Take these cons into account before maxing out your Perkins Loan allotment instead of, say, switching to a Direct Subsidized Loan.

1. Your school might not participate in the program

If you’ve already determined where you’re going to school, check with its financial aid office. The representatives there should be able to tell you if your school participates in the Federal Perkins Loan program.

If you’re choosing between two dream schools, for example, you might find that this aid (or lack of it) on one campus serves as the tie-breaker.

2. Your school might not be able to award you much

Even if your school is part of the Federal Perkins Loan program, it could have limited money to divide between you and your peers.

Because of that, it could be hard to predict what you’ll be given on your college award letter. You can estimate your eligibility for aid using the Department of Education’s FAFSA4caster. But you won’t be able to project how much your school (or top school choices) will be able to provide in Perkins Loans.

Fill out your FAFSA early and check in with your school’s financial aid office as soon as you receive your award letter. Also be sure to check in with your school late in the process. Some of your peers might turn down their Perkins Loan amounts, leaving money on the table.

Undergraduate students are allowed to take out a maximum of $5,500 annually for Perkins Loans and $27,500 over the course of their undergraduate career. But the average amount awarded for the 2013-2014 academic year was just $2,014, according to COHEAO.

Perkins Loan maximums:

  • Undergraduate student per year: $5,500
  • Undergraduate student total: $27,500
  • Graduate student per year: $8,000
  • Graduate student total: $60,000

With that said, a borrower who can prove financial need could always combine Perkins Loans with Direct Subsidized Loans.

3. Limited access to income-driven repayment plans

Like other federal loans, your Perkins Loan starts out on a standard repayment plan.

A $5,000 Perkins Loan repaid over a standard 10-year term, for example, would set you back $6,364 total. That’s after 120 monthly payments of $53.

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It becomes more complicated if you graduate with a handful of loans. The average 2016 graduate left campus with $37,172 in student loan debt.

Having access to an income-driven repayment plan can ease the burden. It would allow you to make more gradual student loan payments relative to your earnings.

Unfortunately, Federal Perkins Loan program borrowers don’t have the luxury of being able to switch to repayment plans like Pay As You Earn, Income-Based Repayment, or similar options. You’ll need to speak with your school to learn about repayment plans for Perkins Loans.

Consolidating Perkins Loans and Direct Loans, however, would qualify you for certain federal repayment plans. You would give up unique Perkins Loan benefits, such as loan cancellation, in the process. But the reward of a more flexible repayment schedule might be worth it for some borrowers.

4. The program is in jeopardy

The worst news comes last: The Federal Perkins Loan program could be going away for good. As of July 2017, no Perkins Loans will be approved after Sept. 30.

This is despite the best efforts of some members of Congress. New York Representative Elise Stefanik has gained sponsors from both sides of the aisle for her Federal Perkins Loan Program Extension Act of 2017. The bill, also known as H.R. 2482, was introduced in May.

Because 500,000 students and their families borrowed $1.1 billion in Perkins Loans in 2013-2014 alone, you can imagine why many people are hoping for a resolution.

One reason to be hopeful: The Federal Perkins Loan program was also revived on a similar two-year extension in December 2015.

Is a Perkins Loan right for you?

Although the Federal Perkins Loan program has its cons, it has helped pave the way to campus for many students. Since 1958, the program has provided over $28 billion in awards to borrowers attending college and graduate school.

Given its eligibility requirements, the program is not for everyone. Whether you think you might qualify, consider Perkins Loans among your federal student loan options.

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LenderVariable APREligibility 
1 Important Disclosures for CollegeAve.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  2. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
  3. As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.


2 Important Disclosures for Discover.

Discover Disclosures

  1. At least a 3.0 GPA or equivalent qualifies for a one-time cash-reward of 1% of the loan amount of each new Discover student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.

3 Important Disclosures for Ascent.

Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Ascent rates are effective as of 12/01/2018 and include a 0.25% discount applied when a borrower in repayment elects automatic debit payments via their personal checking account. Competitive rates calculated monthly at the time of loan approval.
    Ascent Tuition Cosigned Loan: Variable rate loans are based on a margin between 2.00% and 11.00% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.310%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 4.06% – 13.06%. Fixed rate loans have an APR range between 5.66% – 14.73%. For Ascent Tuition loan current rates and repayment examples visit www.AscentTuition.com/APR.
    Ascent Independent Non-Cosigned Loan: Variable rate loans are based on a margin between 4.00% and 12.50% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.310%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 5.72% – 13.01%. Fixed rate loans have an APR range between 7.20% – 13.90%. For Ascent Independent non-cosigned loan current rates and repayment examples visit www.AscentIndependent.com/APR.
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment.
  4. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000.
  5. Interest rate reduction of 0.25% for enrollment in automatic debit applies only when the borrower and/or cosigner signs up for automatic payments and the regularly scheduled, current amount due (including full, flat, or interest only payments, as applicable) is successfully deducted from the designated bank account each month. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of In-School, Deferment, Grace or Forbearance. If you have two (2) returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the 0.25% interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the 0.25% interest rate reduction.
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions. Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation:
    · The student borrower has graduated from the degree program that the loan was used to fund.
    · The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate)
    · The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement.
    · Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicants ability to supply the necessary information for submission.


* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

5 Important Disclosures for PNC.

PNC Disclosures

  1. Interest will continue to accrue during periods of deferment. You will receive quarterly interest statements during this deferment period. Paying the interest as it accrues each quarter will save you money over the repayment term of the loan because any accrued interest that you do not pay will be added to the principal balance at the end of the deferment period.
  2. If automatic payment is discontinued, you will no longer receive an automatic payment discount. A federal regulation limits the number of transfers that may be made from a savings or money market account. Please contact your financial institution for more information on transfer limitations on savings accounts.
  3. A request to release a co-signer requires that you have made forty-eight (48) consecutive timely payments with no periods of forbearance or deferment within the forty-eight (48) month timeframe. “Timely payment” means each payment is made no later than the 15th day after the scheduled due date of the payment. “Consecutive payment” means the minimum monthly payment must be made for forty-eight (48) months straight without any interruption. To qualify for a co-signer release, the borrower must submit a request, meet the consecutive, timely payment requirements, provide proof of income and pass a credit check.

PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.


6 Important Disclosures for SunTrust.

SunTrust Disclosures

Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.

Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.

SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.

  1. Interest rates and APRs (Annual Percentage Rates) depend upon (a) the student’s and cosigner’s (if applicable) credit histories, (b) the repayment option and repayment term selected, (c) the requested loan amount and (4) other information provided on the online loan application. If approved, applicants will be notified of the rate applicable to your loan. Rates and terms effective for applications received on or after 11/01/2018. The current variable APRs for the program range from 4.123% APR to 13.126% APR and the current fixed APRs for the program range from 5.351% APR to 14.051% APR (the low APRs within these ranges assume a 7-year $10,000 loan, with two disbursements and no deferment; the high APRs within these ranges assume a 15-year $10,000 loan with two disbursements). The variable interest rate for each calendar month is calculated by adding the current One-month LIBOR index to your margin. LIBOR stands for London Interbank Offered Rate. The One-month LIBOR is published in the Money Rates section of The Wall Street Journal (Eastern Edition). The One-month LIBOR index is captured on the 25th day of the immediately preceding calendar month (or if the 25th is not a business day, the next business day thereafter), and is rounded up to the nearest 1/8th of one percent. The current One-month LIBOR index is 2.375% on 11/01/2018. The variable interest rate will increase or decrease if the One-month LIBOR index changes. The fixed rate assigned to a loan will never change except as required by law or if you request and qualify for the auto pay discount.
  2. Any applicant who applies for a loan the month of, the month prior to, or the month after the student’s graduation date, as stated on the application or certified by the school, will only be offered the Immediate Repayment option. The student must be enrolled at least half-time to be eligible for the partial interest, fully deferred and interest only repayment options unless the loan is being used for a past due balance and the student is out of school. With the Full Deferment option, payments may be deferred while the student is enrolled at least half-time at an approved school and during the six month grace period after graduation or dropping below half-time status, but the total initial deferment period, including the grace period, may not exceed 66 months from the first disbursement date. The Partial Interest Repayment option (paying $25 per month during in-school deferment) is only available on loans of $5,000 or more. For payment examples, see footnote 7. With the Immediate Repayment option, the first payment of principal and interest will be due approximately 30-60 calendar days after the final disbursement date and the minimum monthly payment is $50.00. There are no prepayment penalties.
  3. The 15-year term and Partial Interest Repayment option (paying $25 per month during in-school deferment) are only available for loan amounts of $5,000 or more. Making interest only or partial interest payments while in school deferment (including the grace period) will not reduce the principal balance of the loan. Payment examples within this footnote assume a 45-month deferment period, a six-month grace period before entering repayment and the Partial Interest Repayment option. 7 year term: $10,000 loan disbursed over two transactions with a 7 year repayment term (84 months) and a 8.468% APR would result in a monthly principal and interest payment of $199.90. 10 year term: $10,000 loan disbursed over two transactions with a 10-year repayment term (120 months) and an 8.938% APR would result in a monthly principal and interest payment of $162.92. 15 year term: $10,000 loan disbursed over two transactions with a 15-year repayment term (180 months) and a 9.423% APR would result in a monthly principal and interest payment of $136.90.
  4. The 2% principal reduction is based on the total dollar amount of all disbursements made, excluding any amounts that are reduced, cancelled, or returned. To receive this principal reduction, it must be requested from the servicer, the student borrower must have earned a bachelor’s degree or higher and proof of such graduation (e.g. copy of diploma, final transcript or letter on school letterhead) must be provided to the servicer. This reward is available once during the life of the loan, regardless of whether the student receives more than one degree.
  5. Earn an interest rate reduction for making automatic payments of principal and interest from a bank account (“auto pay discount”). Earn a 0.25% interest rate reduction when you auto pay from any bank account and an extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank checking, savings, or money market account. The auto pay discount will continue until (1) automatic deduction of payments is stopped (including during any deferment or forbearance) or (2) three automatic deductions are returned for insufficient funds during the life of the loan. The extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank account will be applied after the first automatic payment is successfully deducted and will be removed for the reasons stated above. In the event the auto pay discount is removed, the loan will accrue interest at the rate stated in your Credit Agreement. The auto pay discount is not available when payments are deferred or when the loan is in forbearance, even if payments are being made.
  6. A cosigner may be released from the loan upon request to the servicer provided that the student borrower is a U.S. citizen or permanent resident alien, has met credit criteria and met either one of the following payment conditions: (a) the first 36 consecutive monthly principal and interest payments have been made on-time (received by the servicer within 10 calendar days after their due date) or (b) the loan has not had any late payments and has been prepaid prior to the end of the first 36 months of scheduled principal and interest payments in an amount equal to the first 36 months of scheduled principal and interest payments (based on the monthly payment amount in effect when you make the most recent payment). As an example, if you have made 30 months of consecutive on-time payments, and then, based on the monthly payment amount in effect on the due date of your 31st consecutive monthly payment, you pay a lump sum equal to 6 months of payments, you will have satisfied the payment condition. Cosigner release may not be available if a loan is in forbearance.
  7. If the student dies after any part of the loan has been disbursed, and the loan has not been charged off due to non-payment or bankruptcy, then the outstanding balance will be forgiven if the servicer is informed of the student’s death and receives acceptable proof of death. If the student becomes totally and permanently disabled after any part of the loan has been disbursed and the loan has not been charged off due to non-payment or bankruptcy, the loan will be forgiven upon the servicer’s receipt and approval of a completed discharge application. If the student borrower dies or becomes totally and permanently disabled prior to the full disbursement of the loan, and the loan is forgiven, all future disbursements will be cancelled. Loan forgiveness for student death or disability is available at any point throughout the life of the loan.

7 Important Disclosures for LendKey.

LendKey Disclosures

Additional terms and conditions apply. For more details see LendKey


8 Important Disclosures for CommonBond.

CommonBond Disclosures

A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.

Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.

Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
If you are unable to pay your government loan, the government can refer your loan to a collection agency or sue you for the unpaid amount. In addition, the government has special powers to collect the loan, such as taking your tax refund and applying it to your loan balance.

A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If you refinance your government loan, your new lender will use the proceeds of your new loan to pay off your government loan. Private student loan lenders do not have to honor any of the benefits that apply to government loans. Because your government loan will be gone after refinancing, you will lose any benefits that apply to that loan. If you are an active-duty service member, your new loan will not be eligible for service member benefits. Most importantly, once you refinance your government loan, you will not able to reinstate your government loan if you become dissatisfied with the terms of your private student loan.

If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you are a borrower with a secure job, emergency savings, strong credit and are unlikely to need any of the options available to distressed borrowers of government loans, a refinance of your government loans into a private student loan may be attractive to you. You should consider the costs and benefits of refinancing carefully before you refinance.

If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.

Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.


9 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Student Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of November 1, 2018, the one-month LIBOR rate is 2.29%. Variable interest rates range from 4.26% – 12.23% (4.26% – 12.13% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 5.25% – 12.19% (5.25% – 12.09% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown requires application with a cosigner, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.
  2. Multi-year approval funds available for future use are subject to a soft credit inquiry at time of your next request to verify continued eligibility. After we make the initial Loan to you, we may refuse to allow you to take out additional loans under the multi-year approval feature, terms and conditions will be outlined in your promissory note. Please Note: International students are not eligible to receive an offer for multi-year approval. Please Note: International Students are not eligible for the multi-year approval feature.
  3. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  4. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  5. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
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