Forbearance for student loans is a temporary pause or reduction of your monthly loan payments, granted by your loan servicer when you face financial hardship. It allows you to 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 during forbearance, which means your total debt may grow.
How Does Student Loan Forbearance Work?
When you enter forbearance, your loan servicer agrees to let you pause or reduce payments for a specific time. You must request forbearance from your servicer, and you may need to provide proof of hardship, such as medical bills or job loss. During forbearance, interest continues to build on your loans, and if you have unsubsidized loans, that interest is added to your principal balance when forbearance ends.
Forbearance is not automatic – you must apply and be approved. Your servicer will tell you how long the forbearance lasts and what happens after it ends. You can usually request forbearance online, by phone, or by mail.
Types of Forbearance
There are two main types of forbearance: general and mandatory. General forbearance is at the servicer’s discretion, while mandatory forbearance must be granted if you meet certain conditions.
General Forbearance
Your servicer may offer general forbearance for reasons like financial hardship, illness, or other situations. You can request it for up to 12 months at a time, and you may renew it, but there is usually a total limit of 3 years.
Mandatory Forbearance
Your servicer must grant forbearance if you qualify for specific situations, such as serving in a medical or dental internship or residency, serving in the AmeriCorps, or having a monthly student loan payment that exceeds 20% of your total monthly income.
How to Apply for Forbearance
To get forbearance, contact your loan servicer directly. You will need to fill out a forbearance request form and possibly provide supporting documents, like proof of income or medical bills. Here are the steps:
- Contact your loan servicer to ask about forbearance options.
- Complete the required forbearance request form.
- Provide any required documentation, such as pay stubs or medical records.
- Submit the form and wait for approval – you may receive a written notice.
Forbearance vs. Deferment
Forbearance and deferment both allow you to pause payments, but they differ in interest handling. During deferment, interest does not accrue on subsidized federal loans, but it does on unsubsidized loans. During forbearance, interest accrues on all loan types. Deferment is usually better for your finances because interest may not grow on subsidized loans.
| Feature | Forbearance | Deferment |
|---|---|---|
| Interest on subsidized loans | Accrues | Does not accrue |
| Interest on unsubsidized loans | Accrues | Accrues |
| Eligibility | Financial hardship or other reasons | Specific situations like school enrollment or economic hardship |
| Maximum duration | Usually 3 years total | Varies by type, often 3 years |
Pros and Cons of Forbearance
Forbearance can provide immediate relief, but it has downsides. Understanding both helps you decide if it’s right for you.
Pros
- Stops or lowers your monthly payments temporarily.
- Helps you avoid default when you face temporary hardship.
- Available for both federal and private student loans (though private terms vary).
- You can often get it quickly without lengthy paperwork.
Cons
- Interest continues to accrue, increasing your total debt.
- Your monthly payment may increase after forbearance ends.
- It may extend your repayment term.
- It does not help with long-term financial problems.
Alternatives to Forbearance
Before choosing forbearance, explore other options that might be better. Income-driven repayment plans can lower your monthly payment based on your income, and they may even lead to loan forgiveness after 20 or 25 years. You could also consider deferment if you qualify, or ask about a reduced payment plan.
For federal loans, you can use the loan simulator on the Federal Student Aid website to compare plans. For private loans, contact your lender to ask about hardship programs.
Key Takeaways
Forbearance is a useful tool for short-term relief, but it is not free – interest keeps growing. Always weigh the long-term cost against the benefit of pausing payments. If you need help, contact your loan servicer early and explore all options. Remember, forbearance should be a last resort after you’ve considered income-driven repayment or deferment.
Frequently Asked Questions
Is forbearance a good idea for student loans?
Forbearance can be a good short-term solution if you face temporary financial problems, but it increases your total debt because interest accrues. It is best to use it only when other options like income-driven repayment are not suitable.
How long can you stay in forbearance on student loans?
For federal student loans, general forbearance can last up to 12 months at a time, and you can renew it, but the total limit is usually 3 years. Mandatory forbearance may have different limits depending on your situation.
Does forbearance affect your credit score?
Forbearance itself does not directly hurt your credit score because you are making an agreement with your servicer. However, if you stop making payments without approval, that can damage your credit.
Can you get forbearance on private student loans?
Yes, many private lenders offer forbearance, but terms vary by lender. You must contact your lender directly to ask about their specific policies and eligibility requirements.
What happens after forbearance ends on student loans?
After forbearance ends, you must resume making regular payments, and any interest that accrued during forbearance may be added to your principal balance, increasing your monthly payment or extending your repayment term.
