Forbearance is a temporary pause or reduction of your federal student loan payments. When you enter forbearance, you stop making payments (or make smaller payments) for a set period, usually up to 12 months. However, interest continues to accrue on all loan types, including subsidized loans, which can increase your total balance.
How Forbearance Works
Forbearance is not automatic — you must request it from your loan servicer. You can ask for a general forbearance if you have financial hardship, medical expenses, or other qualifying situations. Your servicer may grant it for up to 12 months, and you can request a renewal if needed.
During forbearance, you are not required to make payments, but interest keeps adding up. If you have unsubsidized loans, that interest is capitalized (added to your principal) at the end of the forbearance period. For subsidized loans, interest also accrues, but the government may pay it under certain conditions — but not under standard forbearance.
Types of Forbearance
There are two main types: general and mandatory. General forbearance is at the servicer’s discretion. Mandatory forbearance must be granted if you meet specific criteria, such as serving in a medical or dental residency, or having student loan payments that exceed 20% of your monthly income.
General Forbearance
You can request this for financial hardship, illness, or other reasons. The servicer decides whether to approve it. It’s commonly used when you can’t afford payments but don’t qualify for deferment.
Mandatory Forbearance
Your servicer must grant this if you qualify under federal rules. Examples include teaching in a national service position, serving in a medical internship, or having a disability that prevents employment. You must provide documentation.
Forbearance vs. Deferment: Key Differences
Deferment is similar but often better because interest does not accrue on subsidized loans. Forbearance is usually a last resort because interest grows on all loans. Here’s a quick comparison:
| Feature | Forbearance | Deferment |
|---|---|---|
| Interest on subsidized loans | Accrues (you pay it) | May be paid by government |
| Interest on unsubsidized loans | Accrues and capitalizes | Accrues (you pay it) |
| Eligibility | Financial hardship, medical, etc. | Enrollment, unemployment, economic hardship |
| Maximum duration | 12 months per request | Up to 3 years for economic hardship |
Always explore deferment first. If you qualify, it can save you money. Forbearance should be your backup option.
Pros and Cons of Forbearance
Forbearance can provide short-term relief, but it has long-term costs. Consider these points before you apply:
- Pros: Stops collection calls and prevents default.
- Pros: Gives you time to recover from financial shocks.
- Cons: Interest accrues on all loans, increasing your debt.
- Cons: Capitalized interest can make your monthly payment higher later.
- Cons: It does not count toward loan forgiveness programs like Public Service Loan Forgiveness (PSLF).
How to Apply for Forbearance
Contact your loan servicer directly. You can request forbearance online, by phone, or by mail. You’ll need to explain why you need it and provide supporting documents, such as medical bills or proof of income loss. The servicer must respond within a reasonable time.
If you have multiple federal loans, you can request forbearance on some or all of them. Be specific about which loans you want to pause. For private student loans, forbearance is not guaranteed; check with your private lender for their policies.
Alternatives to Forbearance
Before choosing forbearance, consider income-driven repayment (IDR) plans. These plans cap your monthly payment at a percentage of your discretionary income, sometimes as low as $0. IDR plans also count toward loan forgiveness after 20 or 25 years.
Another option is deferment, especially if you’re unemployed or in school. You can also request a temporary reduced payment through a loan modification. Always compare the long-term cost of each option.
Impact on Credit and Future Payments
Forbearance does not directly harm your credit score — it’s not reported as a missed payment. However, it can affect your ability to get new credit if your debt-to-income ratio rises due to capitalized interest. After forbearance ends, your monthly payment may increase because the principal is higher.
If you’re pursuing PSLF, forbearance months do not count toward the 120 qualifying payments. You must be in an IDR plan to make qualifying payments. So, if you’re aiming for forgiveness, avoid forbearance unless absolutely necessary.
Key Takeaways
Forbearance is a temporary payment pause that can help in a crisis, but it comes with interest costs. Always exhaust deferment and IDR options first. If you do use forbearance, keep track of your balance and plan to resume payments as soon as possible. Consult your loan servicer for personalized advice.
Frequently Asked Questions
How long can I keep my student loans in forbearance?
You can typically get forbearance for up to 12 months at a time, and you may request a renewal if you still face hardship. However, total forbearance time is usually limited to 3 years for most federal loans.
Does forbearance affect my credit score?
No, forbearance itself is not reported as a missed payment, so it does not directly lower your credit score. But it can increase your debt, which may affect your credit utilization and ability to get new loans.
Can I get forbearance on private student loans?
Private lenders are not required to offer forbearance, but many do as a courtesy. You must contact your private lender to ask about their specific policies and eligibility criteria.
What happens to interest during forbearance?
Interest continues to accrue on all loans during forbearance, including subsidized loans. For unsubsidized loans, the interest is added to your principal balance after the forbearance ends, increasing what you owe.
Is forbearance the same as deferment?
No, deferment is different because interest does not accrue on subsidized loans during deferment. Forbearance always accrues interest, making it a more expensive option in the long run.
