Federal Student Loan Repayment

It is important to understand that most types of financial aid come in the form of student loans. For most student loans, repayment is, or can be, deferred until after you leave school or drop below half-time status. At CTU, we will not only work with you throughout the financial aid process, but we will also provide you with valuable resources designed to help you understand and make informed decisions about your repayment obligations.

When you leave CTU, you will have access to our team of Student Loan Specialists who will stay in contact with you regarding the repayment of your student loans. Specialists will be able to provide you with information regarding grace periods, deferment, forbearance and more. These individuals will help you be well-informed if you need to set up a payment plan.

For those who like to budget in advance, you can use the Repayment calculator to estimate the costs of paying back your student loans. You can find the Repayment calculator by visiting Financial Aid Tools.

Additionally, if you have questions regarding managing and repaying your federal student loans, you may also contact the Federal Student Aid Information Center at 1-800-4FED-AID (1-800-433-3243).

Grace Periods and Interest Rates

Federal Direct Loans

After a borrower graduates, leaves school, or drops below half-time enrollment, Federal Direct Loans that were made for that period of study have some time before payments are required to begin. This period of time is called a “grace period”. Each Federal Direct Loan (Subsidized and Unsubsidized) has a six-month grace period that starts the day after you stop attending at least half-time. You don't have to make payments during your grace period; however interest does continue to accrue. Please refer to the Federal Student Aid website for specific award year interest rates: https://studentaid.gov/understand-aid/types/loans/interest-rates.

Federal Direct PLUS Loans

Unlike Federal Direct Loans, there is no automatic six-month grace period for Federal Direct PLUS Loans. However, for a Direct PLUS Loan borrower, repayment can be deferred while your child is enrolled in school at least half time and for an additional 6 months after they graduate, leave school, or drop below half-time enrollment. If you are a graduate or professional student who took out a Grad PLUS loan prior to the One Big Beautiful Bill Act changes, your PLUS Loan will automatically get a six month deferment after you graduate, leave school, or drop below half-time enrollment. Your loan servicer will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

Please refer to the Federal Student Aid website for other specific award year interest rates: https://studentaid.gov/understand-aid/types/loans/interest-rates.

Direct Loan Repayment Plans

A borrower's repayment period begins the day after their loans' grace periods end. Your loan servicer will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment. Borrowers have many repayment options to choose from, which can be found on the Department of Education's website https://studentaid.gov/manage-loans/repayment/plans. Please note, if you received a federal loan disbursement prior to July 1, 2026, your repayment options may differ slightly from the list below, due to changes from the One Big Beautiful Bill Act. The list below pertains to repayment options for any federal loan disbursements received on or after July 1, 2026.

If your financial circumstances change at any time during the course of repayment, you may contact your loan servicer to discuss, apply and/or change to alternative repayment options.

• Payment in Full: You may repay a portion or your entire loan at any time without penalty.
• Tiered Standard Plan: Fixed monthly payment to repay the loan in full within 10-25 years, depending on the amount of loans borrowed. Borrowers will be automatically enrolled in the tiered standard repayment plan, but can choose a different plan.
• Repayment Assistance Plan (RAP): A monthly payment uses a percentage of your annual income (most commonly your adjusted gross income, or AGI), divided by 12. The amount can change depending on the number of dependents, or if you're married and you file a joint income tax return.
• Consolidation: This loan is designed to assist you with managing your debt. It is available only to students who are no longer in school. You may combine loan amounts from, FFEL / Direct Loan, other loans and lenders into one payment schedule using a fixed interest rate and longer repayment period (up to 30 years). This allows an extended repayment period and lower monthly payments. However, the interest rate and total cost of the loan may be greater. In addition to increasing your total cost of debt, you may lose eligibility for certain types of deferments if you consolidate. Carefully review your deferment eligibility before making the decision to consolidate. Under certain circumstances, your student loan, or a portion of your loan, may be cancelled, forgiven, or discharged. If you consolidate your loans, you may lose eligibility for certain cancellation or forgiveness programs. To apply for a Federal Consolidation Loan, your loans must be in a grace period or in repayment (including periods of deferment). If you choose to waive your grace period, that waiver is permanent and cannot be rescinded. If your loans are in default, you do have options if you want to consolidate. For more information visit https://studentaid.gov/manage-loans/consolidation, or contact your loan servicer.

For Parent PLUS loan repayment options, please visit: https://studentaid.gov/announcements-events/big-updates.

Deferment, Forbearance, and Loan Discharge/Forgiveness

Deferments

One way to have your loan payments postponed is through a deferment. A deferment is a period of time during which your lender temporarily suspends your regular payments. Deferments are not automatic; you must apply and be approved for deferment.

• Returned to school for at least half-time attendance
• Rehabilitation training program
• Loss of a job or inability to find a job (up to three years)
  • Unemployment deferments will not be available for loans made on or after July 1, 2027, due to changes from the One Big Beautiful Bill Act.
• Active Duty Military service
• Economic hardship, or serving in the Peace Corps (up to three years)
  • Economic hardship deferments will not be available for loans made on or after July 1, 2027, due to changes from the One Big Beautiful Bill Act.
• Graduate fellowship program
• Undergoing cancer treatment

For Parent PLUS Loans, please refer to the promissory note for specific deferment provisions.

Forbearance

If you are having difficulty repaying your loan but do not qualify for a deferment, you may request a forbearance from your lender or servicer. Forbearance is the temporary postponement or reduction in your payment. It may extend the time it takes to repay your loan. Interest continues to accrue during the forbearance, causing the total loan amount to increase. You must contact your lender/holder to request forbearance. Most forbearance is discretionary - it is completely up to your loan holder to grant one. There are two types of forbearances, General and Mandatory.

General Forbearances are temporary. General Forbearances with loans received before July 1, 2027 may be granted for no more than 12 months at a time. General Forbearances with loans received on or after July 1, 2027 may be granted for up to nine months within a 24-month period. Additional General Forbearances may be requested if you continue to meet the eligibility requirements. There is a cumulative limit on general forbearances of three years.

General Forbearances may pertain to situations such as:

• Financial difficulties
• Medical Expenses
• Change in Employment
• Other reasons acceptable to the loan servicer

Mandatory Forbearances may not exceed 12 months at a time. Additional Mandatory Forbearances may be requested if you continue to meet the eligibility requirements.

Mandatory Forbearances may pertain to situations such as:

• Service in a medical or dental internship or residency program
• The total amount owed each month for all the student loans received is 20 percent or more of your total monthly gross income, for up to three years
• Service in an AmeriCorps position for which a national service award is received
• Performing a teaching service that would qualify for teacher loan forgiveness
• Qualification for partial repayment of loans under the U.S. Department of War Student Loan Repayment Program
• Member of the National Guard and have been activated by a governor, but are not eligible for a military deferment

Loan Discharge/Forgiveness

You may be eligible for loan discharge/forgiveness if you meet the federally mandated requirement. If you are eligible for loan discharge, your student loan will be forgiven and you will not have to repay the loan.

Possible reasons for student loan discharge include:

• Total and permanent disability
• False certification of student eligibility or unauthorized signature/unauthorized payment discharge
• Death
• Identity Theft
• School closure
• Certain areas of the teaching, child care, or healthcare professions
• Bankruptcy
  • Please note, it is rare for federal student loans to be discharged, forgiven, or cancelled due to bankruptcy.
• Certain Public Service Employees
• Certain Nonprofit Employees
• Unpaid refund and any accrued interest and other charges associated with the unpaid refund

The following reasons would not warrant discharge or forgiveness of Federal Direct Loans:

• The student didn’t complete the program of study
• The student didn’t like the school of the program of study
• The student didn’t obtain employment after completing the program of study

Loan Repayment Programs

There are certain programs that help borrowers repay loans. These include but are not limited to:

• AmeriCorps service program (www.americorps.org or (800) 942-2677)
• Serving as an enlisted person in the National Guard or Reserve programs (contact your recruiter for information)

Consequences of Default

Loans must be repaid and your signed promissory note includes details about your rights and responsibilities for your student loans. Failure to make timely payments on these loans may result in your loan being placed in what is called “default” status. A Direct Loan is considered in default when it is more than 270 days past due.

Some of the consequences of default may include:

• Adverse credit score. This could impact your ability to borrow in the future (e.g., you may be denied a car loan);
• Loss of eligibility for further federal student financial aid;
• Loss of deferment and forbearance entitlements and flexible repayment options;
• Garnishment of your wages;
• Withholding of your state and federal treasury payments (including tax refunds and a portion of Social Security benefits);
• Civil lawsuit, including court costs and legal expenses. The federal government can take legal action against you;
• Late fees, additional interest, court costs, collection costs, attorney’s fees, and other costs incurred in collecting the loans, which can increase your loan debt;
• Suspension of your professional license, if applicable.

Please visit https://studentaid.gov/default-support/ or contact your loan servicer to review your options to prevent or resolve a loan default.

Financial Aid is available for those who qualify.