What Is Forbearance of Student Loans? Understanding Your Options and How It Works
- alexliberato3
- Oct 10
- 14 min read
If you’ve ever wondered, "what is forbearance of student loans?" you’re not alone. Life can throw some real challenges your way, and sometimes making your student loan payments just isn’t possible. Forbearance is one of the options that lets you pause or reduce your payments for a while if you’re facing money problems. It’s not a permanent fix, but it can give you some breathing room when you need it most. In this article, we’ll break down how student loan forbearance works, who can use it, what it costs, and what you should think about before deciding if it’s the right move for you.
Key Takeaways
Forbearance of student loans lets you pause or lower your payments for a limited time if you’re having financial trouble.
Both federal and private student loans can offer forbearance, but the rules and eligibility depend on your lender and loan type.
Interest keeps building up during forbearance, so your total balance may be higher when payments start again.
Forbearance can help you avoid missed payments and default, but it often means paying more in the long run.
Alternatives like deferment, income-driven repayment, or refinancing may be better for some borrowers, so it’s smart to compare all your options.
What Is Forbearance of Student Loans and Who Qualifies
Definition and Purpose of Student Loan Forbearance
Student loan forbearance is an agreement between you and your loan servicer that lets you stop or reduce your monthly student loan payments for a limited time. It’s designed as temporary relief if you’re unable to make payments due to short-term financial setbacks. Forbearance doesn’t erase your debt, but it can help you avoid missing payments, going into default, or damaging your credit when you’re in a tough spot.
Some common reasons for requesting forbearance are:
Sudden job loss or cut in income
Serious illness or medical expenses
Family emergencies or caregiving responsibilities
Natural disasters affecting your ability to earn or pay
Forbearance is a pause, not a pardon. When it’s over, you’ll still owe the money, and sometimes, even more due to interest.
Situations That May Qualify for Forbearance
Loan servicers assess requests based on certain situations that make repayment difficult:
Financial hardship (loss of income, high medical bills)
High monthly loan payments compared to income (e.g., payments are 20% or more of gross monthly income)
Participation in specific service programs (like AmeriCorps or medical residencies)
Active duty in the National Guard
Impact from natural disasters
In several cases, you might qualify automatically for certain types of administrative forbearance, such as changes in federal loan programs or national emergencies.
Federal vs. Private Loan Eligibility Requirements
Eligibility for forbearance changes depending on if your loan is federal or private:
Federal loans generally offer more flexibility and a defined path to apply for forbearance. For private loans, each lender sets its own policies. These may be stricter, with some lenders limiting forbearance to severe hardship, and charging extra fees on top of accrued interest. It's also important to investigate government programs like the Repayment Assistance Plan if you're facing ongoing hardship, as they sometimes provide direct payment support in addition to or instead of forbearance.
In short, forbearance options are available, but your eligibility—and the process to apply—will depend on your loan type, your situation, and your lender’s specific rules. It’s a good idea to check your loan documents or contact your loan servicer as soon as you know you might need help.
How Forbearance of Student Loans Works
Student loan forbearance can be a helpful pause when making payments becomes tough. Whether you have federal or private loans, the basic idea is the same: you get temporary relief by putting your payments on hold or making them smaller for a set time. But the way it works can depend on your lender and the type of loan. Here’s how forbearance plays out, step by step.
Typical Forbearance Periods and Extensions
Most forbearance options are not indefinite. They are designed for short-term challenges. Usually, federal loan forbearance is granted for periods up to 12 months at a stretch. If you still need help when your time is up, you might ask for an extension, but there’s almost always a total cap—often three years total for general forbearance.
For private loans, the rules depend on your lender. Some might offer three- or six-month breaks, and others might handle extensions case by case. This means you need to keep in close contact with your servicer if your hardship continues longer than expected.
If you find yourself nearing the end of a forbearance period, always ask about your options before payments resume, so you’re not caught off guard.
Application and Approval Process
Getting forbearance isn’t automatic—you need to apply. Here’s what the typical process looks like:
Contact your loan servicer. This is the company that handles your payments.
Fill out the required forbearance request form. For federal loans, you’ll likely need to provide proof of your financial hardship or document your situation.
For private loans, each lender may have their own process or special forms.
Wait for approval: Federal forbearance decisions are more standardized, while private lenders decide on a case-by-case basis.
Remember, communication is key. If you miss payments before your forbearance is approved, there could be negative consequences. Staying organized—and proactive—will help you get the most out of this temporary break. If you want more information on what it's like to work with different loan types, consider student loans with deferred payment as another alternative you might be eligible for.
Interest Accrual During Forbearance
While your payments are paused or reduced, interest almost always keeps adding up. This applies to both federal and private loans, and it’s a big factor to watch:
For Direct federal loans, interest does not capitalize during forbearance anymore (since July 2023), meaning it doesn’t get added to your principal at the end of forbearance. But for FFEL and Perkins loans, any unpaid interest still gets stacked onto your balance at the end.
On private loans, policies differ. Most add up the unpaid interest and roll it into your principal when forbearance ends—meaning your future payments could get bigger.
You can choose to pay just the interest while your loans are in forbearance, helping to keep your total costs in check.
It’s important to understand that forbearance provides breathing room now, but your overall debt may grow while you’re not making payments. Consider paying off the interest as it stacks up, if you’re able, to lessen the hit down the road.
Forbearance is best seen as a safety net during short-term setbacks—not a long-term plan for managing debt.
Types of Student Loan Forbearance Options
Student loan forbearance isn't one-size-fits-all—the options available depend on your type of loan and your circumstances. Understanding each forbearance choice is key to finding what fits your situation. Federal loans generally offer more structured types, while private loans may be more limited or variable.
General and Mandatory Forbearance
When it comes to federal student loans, forbearance comes in two main categories: general (or discretionary) and mandatory.
General Forbearance: Your loan servicer reviews your situation—like medical hardship, unemployment, or other financial issues—and decides whether to grant a pause on payments. You can usually request up to 12 months at a time, with a typical maximum limit of three years overall.
Mandatory Forbearance: If you meet certain criteria, your servicer must let you pause payments, regardless of other factors. Scenarios include being in a medical or dental internship/residency, participating in AmeriCorps, working under the Department of Defense student loan repayment program, serving in the National Guard, or qualifying for loan forgiveness programs for teachers.
Table: Comparison of Federal Forbearance Types
Hardship and Medical Forbearance
Certain hardships qualify both federal and some private borrowers for special forbearance:
Major medical expenses
Extended illness
Job loss or significant change in employment
You’ll typically need to provide proof of your situation, as lenders may ask for documentation. Sometimes, hardship forbearance overlaps with general forbearance, but always check with your servicer, especially if you have private loans where rules differ.
Not all financial challenges qualify for hardship forbearance, but if you’re facing medical bills or long-term unemployment, you should speak with your loan servicer about available accommodations.
Forbearance for Federal Versus Private Loans
Federal and private student loans handle forbearance differently. Federal loans have standard procedures, while private lenders set their own policies—and these can differ widely. For more information on the protections and flexibility differences between the two types, federal student loans tend to provide broader hardship support.
Key Differences to Consider:
Federal servicers follow federal guidelines; private lenders create their own rules for eligibility, length, fees, and interest policies.
Private lenders might offer only a brief pause and could charge extra fees.
Interest generally accrues on all loans during forbearance, but federal loans sometimes have more flexible repayment and hardship programs.
In summary: Federal student loan forbearance is more standardized and often easier to access, while private loan forbearance varies and can have more restrictions. Always check your individual loan agreements before making a decision.
Costs and Consequences of Student Loan Forbearance
Taking a break from student loan payments sounds like a relief, but you have to look closely at the hidden costs and long-term effects before jumping in. Let’s get specific about what pauses in payments actually do to your loan balance and your finances.
How Interest Grows During Forbearance
Putting your loans into forbearance doesn’t freeze everything. Interest still piles up on nearly every federal and private loan while you aren’t making payments. Unless you pay off that interest while it's accruing, it gets added to your total balance afterwards for some types of loans, especially with older ones.
Here’s an example:
At the end of one year, you owe $31,800 instead of the original $30,000. That extra $1,800 keeps compounding, making future payments heavier and the loan last longer.
Interest increases your total repayment cost the longer you pause payments.
Newer federal loans (like Direct Loans) don’t capitalize interest after forbearance (as of July 2023), but for older ones like FFEL or Perkins loans, that accrued interest will be added to your principal.
Paying just the interest while in forbearance can help you avoid a bigger balance later.
Capitalization of Interest and Its Impact
Capitalization means unpaid interest gets added to your main balance—so you end up paying interest on a bigger amount.
Loans with capitalized interest grow larger—more interest next month, higher total cost over time.
For federal loans, rules changed in mid-2023 to reduce how often this happens, but some types (and most private loans) still capitalize.
For old loans or private lenders, you could pick up extra hundreds or thousands in cost from this one thing.
Credit Score Implications
Forbearance on its own won’t trash your credit. Your loans are considered current as long as you follow the process.
If you miss payments before your forbearance is officially approved, though, those late payments could show up on your credit history and lower your score.
After forbearance, you might face higher minimum payments since interest is now included, adding to stress if money is still tight.
Even if forbearance protects you from default, your total balance will grow and you may end up spending much more over time—plan carefully before using this option.
Pausing payments might help now, but the true price often shows up long after the break is over. If you’re thinking about forbearance, consider long-term effects on your loan balance and overall financial health. For a broader perspective on how forbearance moves can ripple through your finances, you can check out aggregate demand influences and their effects.
Alternatives to Student Loan Forbearance
When making payments on your student loans becomes a struggle, it's easy to see why forbearance might look like your best move. But forbearance isn’t your only option, and sometimes it’s not the best one—especially when you consider the extra interest it can add to your loan. Let’s break down some serious alternatives you can look at instead, depending on your situation.
Deferment as an Alternative
Deferment allows you to pause your student loan payments, similar to forbearance. But with deferment, interest doesn’t stack up on subsidized federal student loans, which saves you money in the long run. Consider these points:
Deferment is generally available if you’re unemployed, in grad school, facing economic hardship, or serving in the military.
You need to meet specific eligibility requirements, which your loan servicer can explain.
Private loan deferment rules differ a lot by lender, so always ask before applying.
If you qualify for deferment, especially with subsidized federal loans, you’ll avoid paying interest during the pause.
Income-Driven Repayment Plans
Income-driven repayment (IDR) plans can help make your payments more manageable when money is tight. These plans adjust your monthly bill based on your income and family size—sometimes even lowering your payment to zero temporarily. Here’s what to know:
Your payment could be as low as 10% of your discretionary income.
Repayment may extend up to 20–25 years, after which the remaining balance could be forgiven.
Different plans are available, including PAYE, REPAYE, IBR, and ICR.
Here’s a quick look at the main IDR options:
IDR plans also come with certain tax implications on the forgiven amount, so check the details before enrolling in one (see more info about repayment options).
Refinancing and Loan Forgiveness Programs
If your loans are private or your financial struggles look long-term, refinancing can be a solid strategy. You can ask lenders to combine your loans and possibly get a lower interest rate or more manageable payments. Also, certain forgiveness programs could wipe out your balance after meeting specific requirements.
Refinancing consolidates multiple loans, often resulting in lower interest rates.
Forgiveness programs—like the Public Service Loan Forgiveness (PSLF)—apply if you work for a qualifying public employer and make a set number of payments.
Teachers or public service workers may also qualify for specific forgiveness plans.
Steps to take before refinancing or seeking forgiveness:
Review your credit to see if you’ll qualify for better rates.
Compare lender offers carefully—refinancing federal loans means losing federal protections.
Make sure you understand the eligibility criteria and any long-term costs.
Take time to carefully weigh these options against forbearance, considering both the short-term and long-term impacts on your finances. Making the wrong choice now can lead to higher payments later or forfeited loan protections and benefits.
Deciding If Student Loan Forbearance Is the Right Choice
Making the call on whether to pause your student loan payments isn’t easy. For some, forbearance can be just the breathing room you need when money is tight, but for others, the extra costs can quietly add up. Here’s what to keep in mind as you weigh your options and try to pick your best path forward.
Assessing Short-Term Financial Needs
When money gets tight, stopping payments through forbearance may seem like an easy solution, but it isn’t always the cheapest in the long run. Before applying, it’s important to take a close look at your current money situation:
Is this a temporary problem, or could it last for a while?
Can you cover just the interest during the break, even if you can’t manage the full payment?
Are you facing circumstances like a job loss, major medical bill, or some other one-off event?
If you’re in the middle of a short-term crisis and just need time to get your finances back on track, forbearance might buy you the time you need—especially if your goal is to avoid missing payments or dropping into default.
Comparing Pros and Cons
Forbearance has both helpful and costly sides—you'll want to go into it with wide-open eyes. Here’s a breakdown:
If you stop payments entirely, your loan balance can grow faster.
Interest almost always continues to accrue, even if you aren’t paying anything.
Using forbearance repeatedly over several years can lead to paying back a lot more than the amount you first borrowed.
When to Explore Other Repayment Solutions
In some cases, forbearance isn’t the only—or even the best—option. Alternatives can sometimes offer relief without the same long-term costs. Look at these approaches:
Deferment: If you’re facing certain hardships (like unemployment or school enrollment), deferment can pause payments, sometimes with less interest growth, especially for subsidized loans.
Income-driven Repayment Plans: These plans let you base your payments on what you currently earn, which could lower your monthly amount for federal loans. They also extend your repayment period (though you may pay more in total).
Refinancing: For private loan holders, refinancing can sometimes help you qualify for a lower interest rate or a different monthly payment. Review your options with your servicer, like Nelnet repayment guidance, to see what fits best.
Forgiveness and Cancellation: If you work in certain public service jobs or have loans that qualify for forgiveness, these paths can make a bigger dent in your balance over time.
Forbearance works best as a temporary fix—not a regular solution. If you’re facing long-term financial changes, check out other repayment plans or see if you’re eligible for programs that lower or cancel your payments.
No decision is set in stone, but thinking it through now can save you headaches down the road. Remember to review everything, ask questions, and lean on your loan servicer if you’re not sure what fits your situation.
Not sure if student loan forbearance is right for you? Don’t stress. Take a moment to learn more and get advice that fits your own situation. If you need help, check out our website for simple guidance and next steps.
Conclusion
Student loan forbearance is a tool that can help when you’re facing a tough spot and can’t make your payments. It’s not a permanent fix, but it can give you some breathing room while you sort out your finances. Just remember, interest usually keeps adding up during forbearance, so your loan balance might be higher when you start paying again. Before you decide, look at all your options—like deferment, income-driven repayment, or even refinancing. Talk to your loan servicer if you’re unsure. They can walk you through what makes sense for your situation. Forbearance can be helpful, but it’s best used for short-term problems, not as a long-term solution. Make sure you understand how it works so you can make the best choice for your future.
Frequently Asked Questions
What is student loan forbearance?
Student loan forbearance is a temporary pause or reduction in your loan payments. It is meant to help you if you’re having a hard time making payments because of things like losing your job, medical problems, or other money troubles. During forbearance, you don’t have to pay your loan for a set period, but interest usually still adds up.
Who can get student loan forbearance?
You may qualify for forbearance if you’re facing financial hardship, have a medical emergency, or are dealing with other special situations. Both federal and private student loans can offer forbearance, but the rules are different. You need to check with your loan servicer to see if you qualify and what you need to do.
How long does forbearance last?
For federal student loans, forbearance usually lasts up to 12 months at a time. You can sometimes ask for more time, but there’s often a limit on how many months you can use forbearance in total. Private lenders have their own rules, so the length can change depending on your lender.
Does interest grow during forbearance?
Yes, most of the time, interest keeps adding up while your loan is in forbearance. This means your total loan balance could be bigger when you start paying again. For some federal loans, the interest might not be added to your balance right away, but for others, it will be, which means you could owe more later.
Will forbearance hurt my credit score?
Forbearance itself doesn’t hurt your credit score, as long as you keep up with your loan agreement and don’t miss payments before your forbearance is approved. However, if you miss payments before your loan goes into forbearance, your credit score could be affected.
Are there other options besides forbearance?
Yes, there are other ways to get help with your student loans. You could look into deferment, which sometimes lets you pause payments without building up as much interest, especially for subsidized federal loans. You might also qualify for income-driven repayment plans, loan forgiveness programs, or refinancing your loans to get a lower payment.
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