What is student loan forbearance?

Repaying your student loans is a known part of your financing agreement. However, changes to your income or other unexpected life events can make it difficult to afford your payments. In this case, student loan forbearance could be a helpful option to avoid defaulting on your loans.

Here’s what you need to know about student loan forbearance, including how it differs from student loan deferment as well as alternative options.

USA TODAY Blueprint may earn a commission from this advertiser.

Ad

Our partner

Laurel Road

Fixed APR

5.19% to 9.50%

Variable APR

5.24% to 9.70%

Compare Rates

Via Credible's website

Fixed APR

5.19% to 9.50%

Variable APR

5.24% to 9.70%

What is student loan forbearance?

Student loan forbearance is an agreement where your lender allows you to temporarily pause or reduce your monthly payments. By going into student loan forbearance, you’re essentially buying yourself time to repay your loan if your circumstances or financial situation make it difficult to do so. 

Since you’ll be making few or no payments during forbearance, you won’t move the needle forward in paying off your overall education debt. Interest also continues to accrue during forbearance. Once your loans exit forbearance, your loan servicer or lender will add the accrued interest to the loan’s principal —  a process known as interest capitalization. Afterward, your interest charges going forward will be calculated based on the new, larger balance.

How it works

Federal student loan forbearance programs postpone regular payments for up to 12 months. After that time frame ends, you might choose to reapply for forbearance if necessary. While the lifetime maximum for general forbearance is three years for Perkins loans, the cumulative limit for other federal loans is at your servicer’s discretion.

Forbearance is also available for private student loans in some cases — though these hardship options don’t follow the same guidelines as the federal forbearance program. Instead, private lenders offer forbearance at their discretion, and they also set their own requirements and time limits for these programs.

Remember: If you meet the requirements for forbearance and your request is approved by your servicer or lender, it’s generally only in effect for a short time frame. Depending on the type of loans you have, your reason for forbearance and your servicer or lender, your access to additional student loan forbearance might vary.

Types of forbearance

When it comes to federal student loans, there are two types of forbearance options that borrowers might qualify for — general forbearance and mandatory forbearance.

Direct Loan and Federal Family Education Loan (FFEL) program borrowers have access to both federal student loan forbearance options. Perkins Loan borrowers, on the other hand, can apply for general forbearance, and they might be eligible for mandatory forbearance under certain circumstances. 

General forbearance

General forbearance is available to borrowers who can’t make their federal loan payments because of extenuating circumstances. This option is also referred to as “discretionary forbearance” because the decision to approve or reject your request is at your servicer’s discretion.

Typical reasons to ask for general forbearance include: 

• Financial hardship.
• Sudden urgent and necessary bills (like medical expenses).
• Income or employment changes.
• Other extenuating circumstances.

General forbearance offers repayment relief, but it’s designed as a last-resort option. If your loans are eligible for the program, you can submit a general forbearance request to your loan servicer. 

Tip: If a sudden event might cause you to miss student loan payments in the short term, contact your loan servicer immediately to see what options are available to you.

Mandatory forbearance

As its name suggests, mandatory forbearance requires your federal loan servicer to put your loan in forbearance if you’re eligible. If you have Direct Loans or FFEL program loans, you have access to mandatory forbearance if:

• You receive a national service award while serving in the AmeriCorps.
• You qualify for the Department of Defense Student Loan Repayment Program.
• You’re in a medical or dental internship or residency.
• You’re a governor-activated member of the National Guard and can’t receive military deferment.
• You’re a teacher who qualifies for the teacher loan forgiveness program.
• Your monthly student loan debt burden is 20% or more of your total gross income per month. 

Note: Perkins Loan borrowers are only eligible for mandatory forbearance under the student loan debt burden circumstance.

Private student loan forbearance

Unlike federal loan servicers, private student loan lenders aren’t required to follow the Department of Education’s standardized forbearance regulations. If a private lender offers student loan forbearance, it might impose different requirements for when forbearance is granted as well as varying time limits.

“Private loans generally have a cap on the total months of forbearance allowed over the life of a student loan, [and] the maximum cap can differ between lenders,” says Leah Young, accredited financial counselor (AFC) and northeast regional director at the AccessLex Institute. “It is important to only utilize [forbearance] when absolutely necessary. Otherwise, if future hardship hits, forbearance may not be an option for a private student loan borrower.”

Tip: If you aren’t confident you can make your upcoming private student loan payments, contact your loan servicer immediately. A representative can offer more clarity about your hardship options.

Pros of forbearance

• Offers temporary financial relief: Temporarily pausing your loan payments lets you redirect your resources toward other financial essentials.
• Helps you avoid delinquency or default: Student loan delinquency and default can lead to debt collection, wage garnishment, credit damage and other consequences. Conversely, in forbearance, your lender or servicer temporarily agrees to pause your required payments so you aren’t penalized for missing them. 
• Protects your credit score: Student loan default adversely affects your credit score. While forbearance shows up on your credit report, non-payment during this period doesn’t typically impact your credit.

Cons of forbearance

• Not allowed for loans in bad standing: Loans that are delinquent or in default aren’t eligible for forbearance.
• Not a long-term solution: Federal student loan forbearance is offered for a 12-month period per request while private loan forbearance periods vary by lender. If you still need forbearance after the initial period ends, you must reapply for forbearance, but there are total caps.
• Servicer can reject your request: If your forbearance request doesn’t fall under mandatory forbearance, your loan servicer can opt to approve or deny it after considering your situation. Private lenders can also reject requests for forbearance at their discretion. 
• No credit for loan forgiveness: If you’re pursuing federal student loan forgiveness, forbearance payments won’t count toward the required number of payments for forgiveness programs.

Student loan forbearance vs. deferment

While forbearance and deferment programs both pause your student loan payments, both programs have different requirements and timelines. Additionally, while interest accrues during forbearance, it won’t accrue during deferment if you have federal Direct Subsidized Loans. 

Federal student loan deferment might be possible for the following reasons: 

• You’re receiving cancer treatment.
• You meet certain economic hardship requirements.
• You’re enrolled at least half time in school.
• You have a Parent PLUS Loan, and the child benefitting from the loan is enrolled at least half time.
• You’re a graduate fellow.
• You’re in active or post-active military duty.
• You’re in a rehabilitation training program.
• You’re unemployed.

The duration for deferment varies, based on the deferment program. For example, in-school deferment doesn’t limit your duration, while unemployment deferment limits the period to 36 months. 

Keep in mind: Like with forbearance, deferment for private student loans is sometimes available at the discretion of the lender.

Alternatives to forbearance

If you don’t qualify for forbearance or it doesn’t seem right for you, here are some alternatives to consider:

Sign up for an IDR plan

Generally, students should look for other repayment options before requesting forbearance, according to Rebecca Sanchez, director of financial aid and scholarships at the University of California, Irvine. 

Specifically, Sanchez suggests borrowers explore income-driven repayment (IDR) options to lower their overall monthly payments on federal student loans. IDR plans can lower your monthly payment to a reasonable amount based on your income and family size — typically 10% to 20% of your discretionary income, depending on the plan. In some cases, low-income borrowers might qualify for a $0 monthly payment under an IDR plan.

The catch is that IDR terms are as long as 20 or 25 years, which means you’ll typically pay more interest compared to a standard repayment plan. However, you’ll have a lower payment for the long term — and at the end of it, you could also qualify for loan forgiveness on any remaining balance.

Pursue student loan forgiveness

Several student loan forgiveness and discharge options are available to federal student loan borrowers. For example, if you work full time for a government or nonprofit organization, you could have your federal loans forgiven after making qualifying payments for 10 years through the Public Service Loan Forgiveness (PSLF) program.

While forgiveness won’t take away your payments in the short term, it could greatly reduce your owed debt if you qualify.

Refinance your student loans

If you have good credit, you might be able to reduce your interest rate or payments by refinancing your student loans. 

Keep in mind that while you can refinance both federal and private student loans, refinancing federal loans means you’ll lose access to federal benefits and protections — including federal deferment and forbearance options, IDR plans and forgiveness programs. 

Tip: If you have private student loans and can’t manage your payments, reach out directly to your lender to see what hardship options might be available. Most importantly, be sure to contact your lender before missing any payments as this could disqualify you from some options and could also cause major damage to your credit.