Student loan forbearance is a financial tool that can help borrowers manage their student debts. It can pause payments and provide financial relief when needed, but it can also add to the total amount borrowers repay—and it’s not always the best option.
Misconceptions about what forbearance is, however, can make it hard to figure out whether it’s the right step for you. Here’s what you need to know to make an informed decision about student loan forbearance.
What Is Student Loan Forbearance?
Student loan forbearance is a temporary pause in monthly payments toward a student loan. During student loan forbearance, payments are postponed, but you won’t make progress toward paying back your loan. Your forbearance period also won’t count as a period of repayment for programs that require on-time payments, such as student loan rehabilitation or Public Service Loan Forgiveness.
Which Student Loans Offer Forbearance?
Whether you can get student loan forbearance can depend on the types of student loans you have, why you’re requesting forbearance, and the policies of your lender or student loan servicer.
Federal student loans, for example, offer two options: a general forbearance or a mandatory forbearance. Lenders might also offer private student loan forbearance.
General Forbearance for Federal Student Loans
Federal direct loans, Federal Family Education (FFEL) program loans, and Perkins loans are all eligible for general forbearance. Borrowers can typically request student loan forbearance in cases of a financial hardship, such as medical expenses or a job or income loss. A general forbearance is granted at your student loan servicer’s discretion.
Mandatory Forbearance for Federal Student Loans
Under certain circumstances, servicers are required to grant a student loan forbearance—hence, the mandatory forbearance. Typically, mandatory forbearance is offered for federal direct loans and FFEL program loans only. You can get mandatory student loan forbearance if you:
- Participate in the Department of Defense Student Loan Repayment Program
- Serve in the AmeriCorps
- Train in a medical residency or internship program
- Are on active duty in the National Guard
- Have monthly student loan payments equal to 20% or more of gross monthly income (Perkins loans are eligible)
- Qualify for teacher loan forgiveness
- Live in an area impacted by a federally declared natural disaster
Private Student Loan Forbearance
You might have private student loans if you borrowed for college with a private lender while in school, or if you refinanced your student debt. In both cases, your loans are not held or guaranteed by the federal government. So these private lenders don’t have to follow federal guidelines about when, why, or even if they offer student loan forbearance.
If you’re seeking student loan forbearance, contact your private student loan servicer to discuss your student loan repayment options. Ask whether they offer student loan forbearance or other forms of relief to borrowers.
How Long Does Forbearance Last?
The duration of student loan forbearance depends on many of the same factors as your eligibility for forbearance.
You can typically get federal student loan forbearance for up to 12 consecutive months. A cumulative limit of three years applies to general student loan forbearance. There is no cumulative limit for a mandatory forbearance, however. If your first 12-month forbearance expires and you’re still eligible for a mandatory forbearance, you can simply re-apply for another period of forbearance.
Lenders that offer private student loan forbearance will also typically place limits on how long you can use this option to pause payments. Sallie Mae, for example, grants forbearance for three months at a time, for up to 12 months total. Check with your lender to see how long it can grant forbearance, including any limits.
How Do You Put Student Loans in Forbearance?
If you’re seeking federal student loan forbearance, reach out to your servicer for details on how to apply for it. They can help you find the proper forms you’ll need to complete to request a forbearance. You can also find forms to request forbearance on the Federal Student Aid website’s page on forbearance.
Complete the appropriate form, and submit it to your servicer to start the process of putting your student loan in forbearance. You might need to provide other documentation to prove that you’re eligible for certain types of forbearance.
You’re required to continue making payments even after requesting forbearance. Do not stop paying your student loans until your servicer has confirmed that you’ve been granted forbearance. This could be reported as a late or missed payment to credit bureaus, and damage your credit.
Not all federal student loan forbearance requires a request; in certain cases, it might be granted automatically. One example is the automatic student loan forbearance included in the CARES Act to provide student loan relief during the coronavirus pandemic.
The process to put private student loans into forbearance will vary by lender. In most cases, the place to start is contacting your lender or servicer and asking for more information about how to request forbearance.
How Does Student Loan Interest Work in Forbearance?
Student loan forbearance puts a pause on payments—but not on student loan interest. If you’re approved for forbearance, your usual interest rate will apply. This means your student loan servicer will continue to assess interest during forbearance.
You’re not required to pay anything toward student loans during forbearance, including this interest. If you don’t pay this interest, it will simply accrue during forbearance.
You do have the option to pay student loan interest that accrues during student loan forbearance. This can prevent capitalization and keep your balance from increasing, keeping your overall costs lower.
Does Interest Compound With Student Loan Forbearance?
Unpaid interest isn’t added to your balance during student loan forbearance, so it doesn’t compound. That can change, however, if you have unpaid interest when forbearance ends.
For federal direct loans and FFEL loans, outstanding interest is added to your balance through capitalization once your student loans exit forbearance. Unpaid interest that accrues on Perkins loans is never capitalized.
If unpaid interest is capitalized, your student loan balances will be higher than they were before forbearance, and your student loan interest will compound, meaning that you’ll be charged interest on your student loan interest.
You’ll pay interest on this higher balance, increasing your total interest costs over the life of your loans. If you have large student loan balances or higher student loan rates, these additional costs could be significant.
Are There Any Alternatives to Student Loan Forbearance?
Student loan forbearance isn’t the only way to stop or lower student loan payments. Deferment is similar to forbearance in that it pauses payments in much the same way.
For some borrowers, however, deferment can be a better option. If you have subsidized student loans and Perkins loans, for example, deferment could be a better choice.
For certain types of student loans, the federal government pays all interest that accrues during periods of deferment.
Deferment eligibility requirements also can differ from forbearance, with options to pause payments for returning to school, active military service, or unemployment.
Income-driven repayment plans are another alternative to student loan forbearance for federal student loans. These plans adjust monthly payments to be affordable for you, based on your income level and your family size. Monthly payments can even drop as low as $0 if you’re unemployed or otherwise have no income.
Income-driven repayment can be a smart option if you want lower payments rather than stop payments altogether. Plus, income-driven payments will count toward programs with student loan payment requirements, even if your amount due is $0.
The Bottom Line
Student loan repayment options such as forbearance, deferment, or a new repayment plan can all provide student loan relief when you need it. With a better understanding of forbearance, you’re better equipped to compare this to all your student loan options. Do some research, and run some numbers to decide whether student loan forbearance is the best way to manage your student loan debt.