What Is Student Loan Forbearance?
Student loan forbearance is a temporary pause or reduction in loan payments approved by your loan servicer. It’s generally available to borrowers who are experiencing financial strain, poor health, or other qualifying circumstances.
There are two main types:
- General (Discretionary) Forbearance: Granted at your loan servicer’s discretion for financial hardship, illness, or other personal challenges.
- Mandatory Forbearance: Required in specific circumstances, such as serving in the military, working in a medical or dental internship, or participating in a national service program.
During this period, interest continues to accrue on most loans, including unsubsidized federal loans. That means when the period ends, your total balance may increase.
Common Reasons for Requesting Forbearance
You may want to consider requesting forbearance if you’re temporarily unable to meet your required payments due to:
- Unemployment or reduced income
- Economic hardship
- Serious illness or poor health
- High medical or caregiving costs
- Mental health services or recovery periods
- National emergency or natural disaster
In 2020, for example, the federal government enacted a special administrative forbearance that paused student loan payments and set interest rates to 0% for several years.1 While that program has ended, it highlighted how impactful forbearance can be during widespread hardship.
Could Forbearance Be Right for You?
- Is your income currently $0 or very low? Consider applying for an Income-Driven Repayment (IDR) plan (payments could be as little as $0/mo and count toward forgiveness).
- Are you active duty military? Consider military deferment (0% interest).
- Is your hardship likely to last less than 3 months? Consider forbearance.
- Do you have private loans? Call your lender immediately (options may be limited).
Pros & Cons of Student Loan Forbearance
While forbearance can offer breathing room during a tough financial stretch, it’s important to view it as a short-term measure rather than a lasting fix. The pause in required payments can help you stay current and avoid default, but accumulating interest means your total balance may grow.
| Pros | Cons |
|---|---|
| Temporary relief from required payments |
Interest continues to accrue |
| Avoids delinquency or default |
Higher total repayment cost |
| Simple to request |
Limited duration (typically up to 12 months) |
| May protect credit during hardship |
Generally does not count toward forgiveness programs (exceptions exist for PSLF buybacks) |
Forbearance may help in emergencies, but it’s typically not a long-term repayment solution.
Comparing Forbearance, Deferment & Income-Driven Repayment
When facing student loan repayment challenges, it’s important to understand how different relief options affect your finances both now and in the long term. Each alternative has unique qualifications and potential advantages. It’s worth comparing your eligibility and the long-term effects before deciding.
| Feature | Forbearance | Deferment | Income-Driven Repayment |
|---|---|---|---|
| Interest Accrual | Interest typically accrues on all loans | Interest may not accrue on subsidized loans | Interest may accrue, but under certain plans (e.g., SAVE), the government covers all unpaid interest when required payments are made |
| Approval Basis | Often discretionary (based on hardship or illness) | Based on specific eligibility criteria (e.g., school enrollment, unemployment) | Based on income/family size; must recertify annually |
| Length | Generally up to 12 months at a time | May last as long as you qualify | Can continue indefinitely*; must recertify annually |
| Impact on Balance | Total debt can grow due to accrued interest | Debt growth may be slower if interest is paused | Balance may grow or shrink depending on income/interest subsidies* |
| Monthly Payment | $0 (no payment required) | $0 (no payment required) | Can be as low as $0 based on income |
| Counts Toward Forgiveness | Generally does not count (except PSLF buybacks) | Typically does not count, except for qualifying deferments (e.g., military service) | Yes, counts toward forgiveness (e.g., IDR or PSLF)* |
*Forgiveness may occur after 20-30 years (10 years for PSLF). Forgiven balance may be taxable after 2025.2
How Interest Adds Up During Forbearance
Interest accrual is the most expensive aspect of forbearance. Suppose you owe $30,000 in unsubsidized student loans at 5%. A 12-month forbearance adds roughly $1,500 in unpaid interest.
- For Federal Loans: Under new 2023 regulations, this unpaid interest generally does not capitalize (add to your principal) when forbearance ends. You still owe the $1,500, but you won't pay interest on that interest.
- For Private Loans: Most lenders still capitalize interest. In this scenario, your new principal would become $31,500, and future interest would be calculated on this higher amount, costing you more over time.
How Forbearance Affects Your Credit & Financial Future
Entering forbearance generally does not harm your credit score as long as it’s approved before you miss a payment. However, it may indirectly affect your finances if interest accrues and your total balance grows.
Lenders reviewing your credit report may also see periods of forbearance as indicators of past financial strain. This may be something to keep in mind if you’re applying for other credit or loans.
The Forbearance Request Process
Applying for forbearance typically involves:
- Contacting your loan servicer to explain your situation.
- Completing a forbearance request form (available online or by mail).
- Providing documentation of your hardship, if required.
- Awaiting approval. Your servicer will confirm the start and end dates of your forbearance period.
If approved, you generally remain responsible for any accrued interest. You can choose to pay the interest as it accrues or potentially let it capitalize (be added to your principal balance).
Conclusion
Student loan forbearance can help provide short-term relief when life feels financially overwhelming. It may help you stay current, protect your credit, and regain control during difficult times. But because interest continues to grow, it’s often worth comparing alternatives such as deferment or income-driven repayment.
Understanding your options, and how each could affect your future, may help you make a decision that aligns with your financial situation.
Reframe how you approach student loan repayment to help reduce debt stress. Get My Free Financial Review
Sources
- Federal Student Loan Debt Relief in the Context of COVID-19. https://www.congress.gov/crs_external_products/R/PDF/R46314/R46314.17.pdf
- Income-Driven Repayment Plan Loan Forgiveness. https://studentloanborrowerassistance.org/for-borrowers/dealing-with-student-loan-debt/loan-cancellation-forgiveness-bankruptcy/cancellation-forgiveness-options/idr-cancellation/
- Get Temporary Relief: Deferment and Forbearance. https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief
