Repaying Federal Loans

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 Sanford-Brown, we work with you throughout the financial aid process and provide you with valuable resources in order for you to make informed decisions about your repayment obligations.

Upon leaving school, you may continue to access the National Student Loan Data System (NSLDS) for a summary of your loans, as well as to monitor your payment obligations at NSLDS also provides contact information about your loan servicer(s).

For those who like to plan ahead, we have provided a student loan repayment overview as well as information on grace periods, deferment and forbearance options. Please take the time to review this information about your student-loan borrowing. For Repayment calculators please visit the Financial Aid Tools.

Grace Period

Whether you have borrowed a Stafford loan through the William D. Ford Federal Direct Loan Program (DL) or the Federal Family Education Loan Program (FFELP); when you leave school, or drop below half-time enrollment, you will have up to six months before payments are due to begin.

This period of time is called a “grace period”. You don't have to make payments during your grace period; however interest does accrue on unsubsidized loans and subsidized loans disbursed between 7/1/2012 and 6/30/2014. The grace period allows time to prepare for repayment; it is important to know when your grace period will end. All payments are made to the U.S. Department of Education’s Direct Loan Servicing Center.

There is no automatic six-month “grace period” for Direct PLUS Loans. Direct PLUS Loan repayment is due to begin within 60 days of the final disbursement. Repayment begin dates are applicable to each individual loan.

Student Loan Repayment Options

A borrower’s repayment period begins the day after the grace period ends on their loan. The first payments will be due within 60 days of the beginning of the repayment period. As standard practice, your loan servicer/lender will set you up for a standard repayment plan. However, borrowers have many additional repayment options to choose from. During the course of repayment you may change repayment plans depending on your financial circumstances. You must contact your loan provider to discuss, apply and/or change to alternative repayment options.

  • Pay in Full - You may repay a portion of or your entire loan at any time without penalty.
  • Standard Repayment - Fixed monthly payment to repay the loan in full within 10 years (not including periods of deferment or forbearance). Monthly payments start at a minimum of $50 and remain level. Your actual payments may be higher, depending on the amount you borrow.
  • Graduated Repayment - Payments start out small ($50, or total monthly interest) and increase. This option assumes that income will grow enough to cover the increasing loan payments. You'll pay more total interest over the life of the loan than under the standard plan, because your initial payments mainly go toward interest, not principal. You must repay the loan in full within 10 years (not including periods of deferment or forbearance).
  • Income-Sensitive Repayment (FFELP only) - The payment is adjusted annually based on your yearly income amounts. If you have a relatively low income and a high loan balance, payments may be based on a percentage of your gross monthly income. Your monthly payment must be at least enough to cover the interest that accrues each month. You'll pay more total interest over the life of the loan than under the standard plan, because your initial payments mainly go toward interest, not principal. You must repay the loan in full within 10 years (not including periods of deferment or forbearance).
  • Income-Contingent Repayment (Direct Loans only) - The monthly payment amount will be based on your annual income (and your spouses', if you are married), family size and the total amount owed on your Direct Loans. As your income changes, payments may change. If you do not repay your loan after 25 years under this plan, the unpaid portion will be forgiven. You may have to pay income tax on any amount forgiven.
  • Extended Repayment - To be eligible, you must be a new borrower on or after 10-7-1998 and the total outstanding loan amounts must be $30,000 or more. Payments are either fixed or graduated. The life of the loan must not exceed 25 years. You'll pay more total interest over the life of the loan than under the standard plan, because your initial payments mainly go toward interest, not principal.
  • Pay as you Earn Plan - Under this repayment plan, the required monthly payment for a borrower who has a partial financial hardship is limited to no more than 10 percent of the amount by which the borrower’s AGI exceeds 150 percent of the poverty guidelines applicable to the borrower’s family size, divided by 12. The Secretary of Education determines annually whether the borrower continues to qualify for this reduced monthly payment based on the amount of the borrower’s eligible loans, AGI, and poverty guideline.
  • 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, FFELP / DL, 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 Direct 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 contact the current holder(s) of the loan(s).

There are certain programs that help borrowers repay loans through a variety of ways including creating job opportunities and pathways to training. These include but are not limited to:

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

Deferment, Forbearance and Loan Discharge/Forgiveness


If you find you are unable to make payments you may be able to postpone your payments. One way to postpone your payments is through a deferment. A deferment is a period of time during which your lender temporarily suspends your regular payments. In-school deferments are available to students (undergraduate and graduate) enrolled at least half-time. In addition, Direct Parent PLUS borrowers may request to defer payments of their loans while their student is enrolled at least half-time.

While Direct Parent PLUS Loan borrowers do not have a grace period, they may also apply for a deferment for an additional 6 months after the student graduates or drops below half-time enrollment, however interest continues to accrue.

Deferments are not automatic; borrowers must apply and be approved for deferment. You are responsible for any interest that accrues during the deferment period.

The most common reasons for deferment of Federal Direct Stafford and Direct Grad PLUS Loans include*:

  • Returned to school for at least half-time attendance
  • Rehabilitation training program
  • Loss of a job or inability to find a job
  • Military service
  • Economic hardship
  • Graduate fellowship program

For Direct Parent PLUS Loans deferment approval is based on the parent borrower’s eligibility not the student’s. Reasons may include*:

  • Attending school at least half-time;
  • Unemployed (available up to three years);
  • Studying in an approved graduate fellowship or rehabilitation program for the disabled;
  • Experiencing economic hardship (available up to three years)

*Refer to your Master Promissory Note for specific deferment provisions.


If you are having difficulty repaying your loan(s) but do not qualify for a deferment, you may request forbearance. A forbearance is the temporary postponement or reduction in your payment. Forbearance may extend the time it takes to repay your loan; interest continues to accrue during forbearance which may increase your total loan amount. You must contact your servicer to request forbearance. Forbearance on Direct Loans and Direct PLUS Loans is at the discretion of the Department of Education. Some possible reasons for forbearance include:

  • Poor health
  • Partial disability
  • Unemployment
  • Exhausted eligibility for an internship deferment
  • Loan payment that exceeds 20 percent of your total monthly gross income
  • Circumstances such as a local or national emergency, military mobilization, or natural disaster
  • A rigorous residency program
  • Serving in a position that may qualify you for loan forgiveness, partial repayment of your loan, or a national service educational award
  • Other documented hardship

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 all or partially forgiven. GENERALLY, FEDERAL STUDENT LOANS MAY NOT BE DISCHARGED OR CANCELLED DUE TO BANKRUPTCY. For questions, contact the Direct Loan Servicing Center at 1-800-848-0979, or go to Possible reasons for student loan discharge include, but are not limited to:

  • Total and permanent disability
  • False certification
  • Death
  • Identity Theft
  • School closure
  • Certain areas of the teaching or child care professions
  • Certain Public Service Employees
  • Survivors of victims of the September 11, 2001 attacks

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

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

Consequences of Default

Your loans must be repaid. Remember to review your signed Master Promissory Note; it 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. Being placed in default has serious consequences. Some of the consequences 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 an income tax refund due to you, or you and your spouse, Social Security benefits, etc.);
  • Suspension of your professional license, if applicable; or
  • 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.

For additional Terms and Conditions, please refer to the Federal Stafford Master Promissory Note.

*Financial Aid is available for those who qualify.

To learn more about Sanford-Brown, our career-focused programs or how to apply for admission, please contact us for more information.

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