Federal Perkins Loan Cancellation
NOTE: NC State University Institutional Loans are not eligible for cancellation
Under certain conditions a borrower may have all or part of his or her Federal Perkins Loan (including interest) canceled. Cancellation means that a portion or all of the principal plus accrued interest will never have to be repaid by the borrower.
Although cancellation provisions vary based on when a loan was disbursed, the following procedures apply to any loans:
The request for deferment for pre-cancellation or the request for cancellation must be submitted in a timely matter. If it is not, you will be assessed a LATE CHARGE and may be REPORTED AS A DELINQUENT ACCOUNT TO THE NATIONAL CREDIT BUREAUS. You may also lose your deferment and cancellation benefits if you fail to file your request on time.
Partial cancellations are granted on an annual basis for one completed 12-month period of full-time work/service. No cancellation may be allowed for less than a full 12 months of completed work/service although the work/service may be performed for more than one employer/agency. If work/service is performed for multiple employers/agencies, the borrower must provide certified documentation from each employer/agency for the period worked/served.
Although cancellation may only be granted after completing 12-months of full-time work/service, a borrower should notify ECSI or NC State University as soon as full-time qualifying work/service has been secured to request a deferment of payment. A deferment of payment is issued at the beginning of the 12-month period of full-time work/service in anticipation of the cancellation request at the end of the 12-month period. During deferment, the borrower is not billed for payments.
At the end of a completed 12-month period of full-time qualifying work/service, the borrower must again provide certified documentation as proof of completion. Once proper documentation has been received by ECSI or NC State University, the borrower may receive a cancellation of a percentage of the original amount of principal borrowed plus any accrued interest. The percentage canceled each year and the number of years of cancellation that is allowed depends on the type of cancellation. See the section pertaining to your particular cancellation for cancellation rates.
Requests for cancellation must be completed annually on the appropriate cancellation form. The borrower must provide any documentation the school requests to show that he or she qualifies for cancellation.
No portion of the loan may be canceled for services performed before the loan was disbursed or during the enrollment period covered by the loan.
No repayment made during a period for which a borrower qualified for cancellation may be refunded. Therefore, it is the borrower’s responsibility to file forms in a timely manner.
Defaulted loan amounts are not eligible for cancellation unless the only reason for the default was the borrower’s failure to file a cancellation request on a timely basis. If the borrower is otherwise eligible for the cancellation, the school has the discretion to grant the cancellation to the borrower, but is not required to. However, if the school has accelerated the account by the time the borrower files the necessary cancellation request forms, only eligible service performed prior to the date of acceleration can be considered for cancellation. A borrower is not entitled to cancellation for any eligible service performed after the date of acceleration.
Schools may not grant a cancellation to a borrower who has received a national service education award for volunteer service with Americorps (Subtitle D of Title I of the National and Community Service Act of 1990).
Child or Family Services
A borrower may be entitled to receive cancellation benefits for full-time service as an employee of an eligible public or private non-profit child or family service agency who is providing services to high-risk children who are from low-income communities and the families of such children. The children must be the primary recipients of the services. The Department of Education has determined that an elementary or secondary school system or a hospital is not an eligible employing agency.
The cancellation rate for each completed year of service is as follows;
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Maximum Amount Canceled – Up to 100%
Early Intervention
A borrower may be entitled to receive cancellation benefits as a full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by a lead agency as authorized by section 632(4) of the Individuals with Disabilities Education Act. Early Intervention Services are provided to infants and toddlers, under the age of two, with disabilities.
The cancellation rate for each completed year of service is as follows:
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Maximum Amount Canceled – Up to 100%
Firefighter
A school must cancel up to 100% of the outstanding balance on a borrower’s Perkins loan for service that includes August 14, 2008, or begins on or after that date, as a full-time firefighter.
A firefighter is an individual who is employed by a federal, state, or local firefighting agency to extinguish destructive fires; or provide firefighting related services such as conducting search and rescue, providing hazardous materials (HAZMAT) mitigation, or providing community disaster support and, as a first responder, providing emergency medical services.
The cancellation rate for each completed year of service is as follows;
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Maximum Amount Canceled – Up to 100%
Head Start
A borrower may qualify for a cancellation for service as a full-time staff member in the educational part of a Head Start program. The program must operate for a period comparable to a full academic year, or its equivalent and the borrower’s salary may not be more than that of a comparable employee working in the local educational agency.
The cancellation rate for each completed year of service is 15% of the original principal loan amount plus accrued interest.
Maximum Amount Canceled – Up to 100%
Law Enforcement
A borrower may be entitled to receive cancellation benefits for full-time service as a qualifying law enforcement or corrections officer. To establish the eligibility of a borrower for this benefit, the school must determine (a) if the borrower’s employing agency is eligible and (b) if the borrower’s position is essential to the agency’s primary mission.
A local, state, or federal agency is an eligible employing agency if it is publicly funded and its activities pertain to crime prevention, control, or reduction or to the enforcement of the criminal law. Such activities include, but are not limited to, police efforts to prevent, control, or reduce crime or to apprehend criminals; activities of courts and related agencies having criminal jurisdiction; activities of corrections, probation, or parole authorities; and problems relating to the prevention, control, or reduction of juvenile delinquency or narcotic addiction. Agencies that are primarily responsible for enforcement of civil, regulatory, or administrative laws are ineligible.
For the borrower’s position to be considered essential to the agency’s primary mission, he or she must be a full-time employee of an eligible agency and a sworn officer or person whose principal responsibilities are unique to the criminal justice system and are essential in the performance of the agency’s primary mission. The agency must be able to document the employee’s functions.
Individuals whose official responsibilities are supportive, such as those that involve typing, filing, accounting, office procedures, purchasing, stock control, food service, transportation, or building, equipment or grounds maintenance are not eligible for the law enforcement or correction officer loan cancellation regardless of where these functions are performed. A borrower employed as a public defender also does not qualify for cancellation benefits under this provision.
The cancellation rate for each completed year of service is as follows;
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Maximum Amount Canceled – Up to 100%
Military
A borrower may qualify to have a portion of his or her loan canceled for serving a period of full-time active duty in the U.S. Armed Forces (that is U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard). A member of the National Guard or the Reserves serving a period of full-time active duty in the armed forces may also eligible. The service must be in an area of hostilities or in an area of imminent danger that qualifies for special pay under Section 310 of Title 37 of the U.S. Code. The borrower’s commanding officer must certify the borrower’s service dates. Service for less than a complete year does not qualify. A complete year of service is 12 consecutive months.
The Department of Defense maintains an updated listing of hostile fire/imminent danger pay areas at the following site: Hostile fire areas
U.S. Army Loan Repayment Program
It is useful to know that the U.S. Army offers a loan repayment program as an enlistment incentive. If a borrower of a Federal Perkins Loan serves as an enlisted person in the U.S. Army, in the Army Reserves, or in the Army National Guard, the U. S. Department of Defense will repay a portion of the loan. For more information, the student should contact his or her local military recruiting office. This is a recruitment program, not a cancellation, and does not pertain to an individual’s prior Army service.
Nurse or Medical Technician
A borrower may be entitled to receive cancellation benefits for full-time service as a nurse providing health care services or as a full-time medical technician providing health care services. The borrower must provide health care services directly to patients.
The cancellation rate for each completed year of service is as follows;
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Maximum Amount Canceled – Up to 100%
Prosecuting Attorney
Prosecuting attorneys whose primary responsibilities are to prosecute criminal cases on behalf of public law enforcement agencies are eligible for cancellation benefits. Full-time attorneys employed in federal public defender organizations or community defender organizations, are now also eligible.
For purposes of this cancellation
- A community defender organization is a defender organization established in accordance with section 3006A(g)(2)(B) of Title 18, United States Code. 34 CFR 674.51(e)
- A federal public defender organization is a defender organization established in accordance with section 3006A(g)(2)(A) of Title 18, United States Code.
Cancellations are for eligible service that includes August 14, 2008, or begins on or after that date, regardless of whether information on the expansion of the cancellation category appears on the borrower’s promissory note.
The cancellation rate for each completed year of service is as follows:
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Teacher
Schools may cancel up to 100% of a Federal Perkins Loan if the borrower has served full time in a public or nonprofit elementary or secondary school system as a:
- teacher in a school serving students from low-income families (see below)
- special-education teacher, including teacher of infants, toddlers, children, or youth with disabilities; or
- teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise that is determined by a state education agency to have a shortage of qualified teachers in that state.
Eligibility for teacher cancellation is based on the duties presented in an official position description, not on the position title. To receive a cancellation, the borrower must be directly employed by the school system. There is no provision for canceling Perkins Loans for teaching in postsecondary schools.
The cancellation rate for each completed year of service is as follows:
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
- 30% of the original principal loan amount plus accrued interest for the fifth year of service.
Maximum Amount Canceled – Up to 100%
Teaching in a Low-Income School
Cancellation for teaching in a school serving students from low-income families may be granted only if the borrower taught in an eligible school that is listed in the Directory of Designated Low-Income Schools for Teacher Cancellation Benefits. The Department compiles and publishes this directory of low-income schools annually after consulting with each state’s educational agency. For the online directory, follow this link to the Department of Education.
Subsequent Year Provision: If you receive partial cancellation one year for service in a school which is listed in the Directory, but the next year this same school is not listed, you are still eligible to receive partial cancellation for teaching at this same school based on your prior year qualification.
All elementary and secondary schools operated by the Bureau of Indian Affairs (BIA) are considered to qualify as schools serving low-income families
Volunteer
A borrower may qualify for a cancellation for volunteer service in the Peace Corps or Americorps*VISTA (under Title I, Part A of the Domestic Volunteer Service Act of 1973).
Americorps volunteers do not qualify for this cancellation unless their volunteer service is with Americorps*VISTA. An Americorps*VISTA volunteer may only qualify for this cancellation if the Americorps*VISTA volunteer elects not to receive a national service education award for his or her volunteer service. The Americorps*VISTA volunteer must provide appropriate documentation showing that the volunteer has declined the Americorps national service education award.
An authorized official of the Peace Corps or Americorps*VISTA program must sign the borrower’s cancellation form to certify the borrower’s service.
The cancellation rate for each completed year of service is as follows:
- 15% of the original principal loan amount plus accrued interest for the first and second years of service.
- 20% of the original principal loan amount plus accrued interest for the third and fourth years of service.
Maximum Amount Canceled – Up to 70%