Student Loan Forbearance: A Practical Guide to Short-Term Relief
Learn how student loan forbearance works, when to use it, and how to limit long-term costs while protecting your finances.
Student loan forbearance can give you breathing room when money is tight, but it can also make your loans more expensive over time. Understanding how it works, what it costs, and what other choices you have is essential before you decide to use it.
What Is Student Loan Forbearance?
Student loan forbearance is a temporary pause or reduction in your student loan payments when you are experiencing financial hardship or other qualifying challenges. During forbearance, you are not required to make your full regular payment, but your loan is still active.
For most loans, interest continues to accrue (build up) during forbearance and may be added to your principal balance later, increasing the total amount you repay over time.
- Forbearance is usually short term.
- It is meant for temporary difficulty, not a permanent solution.
- It can be used on many federal student loans and, in some cases, private loans, depending on the lender.
How Federal Student Loan Forbearance Works
Federal student loan forbearance is available through your loan servicer and can allow you to stop payments or reduce them for up to 12 months at a time. You generally must request it; it is not automatic in most situations.
Main Features of Federal Forbearance
- Duration: Up to 12 months per approved period; some types have a cumulative limit, often three years total for general forbearance.
- Interest: Interest usually continues to accrue on all federal loan types during forbearance.
- Eligibility: Depends on your circumstances; some situations give you a right to forbearance (mandatory), while others are up to the servicer’s discretion.
- Application: Typically requires contacting your servicer and, in many cases, submitting a form.
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Types of Federal Forbearance
There are two broad categories of federal student loan forbearance:
| Type of Forbearance | Who Decides | Common Reasons | Typical Duration |
|---|---|---|---|
| General (Discretionary) Forbearance | Servicer chooses whether to approve | Financial hardship, medical expenses, change in employment, other short-term issues | Up to 12 months at a time; lifetime limits usually apply (often 3 years total) |
| Mandatory Forbearance | Servicer must approve if you meet criteria | Qualifying service (such as certain national service programs), medical or dental internship or residency, high student loan payment relative to income, and other specific categories | Up to 12 months at a time; can often be renewed while you remain eligible |
How Interest and Capitalization Affect Your Costs
The biggest long-term cost of forbearance is how interest accrues and may capitalize (be added to your principal balance).
What Happens to Interest in Forbearance?
- Interest continues to build on your outstanding principal for most federal and private loans.
- For federal loans, if you do not pay this interest as it accrues, it may be capitalized at the end of the forbearance period.
- Once interest capitalizes, future interest is charged on this higher principal, which can significantly increase your total repayment amount over time.
Because of these effects, forbearance may offer vital short-term relief but can be more expensive than alternatives like deferment (where some loans may not accrue interest) or income-driven repayment plans (which may limit or subsidize interest for some borrowers).
When Forbearance Might Be a Good Fit
Forbearance can be helpful when your financial challenge is real but temporary, and you expect to be able to resume payments in the near future.
Common Situations Where Borrowers Consider Forbearance
- Short-term job loss or a significant drop in hours or pay.
- Unexpected medical expenses or periods of illness that disrupt income or increase costs.
- Recovery from a natural disaster or other emergency.
- Transition periods, such as waiting for a new job to start or moving for work.
- Time-limited service commitments that qualify for mandatory forbearance.
In these circumstances, forbearance can help you:
- Avoid delinquency or default on your loans.
- Protect your credit from missed payments.
- Free up cash flow to cover essential expenses, such as housing, food, or medical bills.
Drawbacks and Risks of Forbearance
While forbearance can protect you in the short term, it is important to understand the trade-offs before you rely on it.
Key Downsides
- Higher total cost: Interest accrues on most loans and may capitalize, increasing the total you repay.
- Limited time: General forbearance usually has lifetime caps, and mandatory forbearance must be renewed if your qualifying situation continues.
- No progress toward some forgiveness programs: In many cases, months spent in forbearance do not count toward forgiveness requirements, whereas qualifying repayment plans do. (Some limited buyback options or special rules exist but are not guaranteed.)
- May delay financial goals: Because interest keeps increasing your balance, you may stay in debt longer.
Forbearance vs. Deferment vs. Income-Driven Plans
Before choosing forbearance, compare it with other options for lowering or pausing your student loan payments.
| Feature | Forbearance | Deferment | Income-Driven Repayment (IDR) |
|---|---|---|---|
| Payment Requirement | Payments paused or reduced temporarily | Payments paused while you qualify | Payments based on income and family size; may be very low or even $0 for some borrowers |
| Interest on Subsidized Federal Loans | Interest accrues | May not accrue during certain deferments (such as in-school or unemployment, if you have subsidized loans) | Interest may accrue, but under some plans the government covers some or all unpaid interest when you make required payments |
| Impact on Forgiveness | Generally does not count toward repayment-based forgiveness (exceptions are limited) | Usually does not count toward repayment-based forgiveness | Typically counts toward forgiveness under that plan if payments are made as required |
| Best Use Case | Short-term hardship where income will recover soon | Specific situations like in-school, unemployment, or certain hardship categories | Ongoing difficulty making payments or low-to-moderate income relative to debt |
How to Request Student Loan Forbearance
The exact process depends on whether your loan is federal or private, but most borrowers will go through these basic steps.
Step-by-Step for Federal Loans
- Identify your servicer. Confirm who services your loan by logging in to your federal student aid account.
- Contact your servicer. Call or log in to your servicer’s website and explain that you are having trouble making payments and want to discuss temporary relief options.
- Ask about alternatives first. Ask whether you qualify for income-driven repayment, deferment, or other programs that may be less costly over time.
- Request the appropriate forbearance type. If forbearance is still the best choice, your servicer will direct you to the correct form for general or mandatory forbearance.
- Provide documentation. You may need to show proof of income, unemployment, medical expenses, or other details depending on the type of forbearance requested.
- Keep paying until approval. Continue making your scheduled payments until you receive written or electronic confirmation that the forbearance has been approved and indicates the start date.
- Monitor your account. Check that the forbearance dates and interest handling match what you were told, and review your interest balance regularly.
Private Student Loan Forbearance
Private lenders set their own rules. Some offer forbearance or temporary payment reductions, while others provide different types of hardship assistance. Always contact your private lender directly to learn:
- Whether forbearance is available.
- How long it can last.
- How interest will be handled.
- Whether any fees apply.
Strategies to Limit the Cost of Forbearance
If you decide to use forbearance, a few careful steps can keep its long-term costs under better control.
- Use the shortest period you need. Request only the number of months required to get back on track, not the maximum available.
- Pay at least the interest, if possible. Even small monthly interest payments can prevent capitalization and keep your balance from growing as quickly.
- Revisit your budget regularly. As soon as your income improves, explore ending the forbearance early and moving into a more sustainable repayment plan.
- Avoid repeated long forbearances. Frequent or extended forbearance periods can add years and substantial interest costs to your repayment.
Questions to Ask Your Loan Servicer
Before agreeing to forbearance, consider asking your servicer the following:
- What types of forbearance do I qualify for, and how long can they last?
- How much interest will accrue during the requested forbearance?
- Will the interest be capitalized, and if so, when?
- Are there income-driven or other repayment plans I should consider instead?
- How will forbearance affect my eligibility for forgiveness or other benefits?
Frequently Asked Questions (FAQs)
Q: How long can my student loans stay in forbearance?
A single federal forbearance period can last up to 12 months, and general forbearance usually has a cumulative limit (often three years total) over the life of the loan. Private lenders may have different limits.
Q: Does forbearance stop interest from building on my loans?
No. For most federal and private student loans, interest continues to accrue during forbearance and may later be added to your principal balance (capitalized).
Q: Will forbearance hurt my credit score?
Servicers usually report your account as current while you are in an approved forbearance, so it is typically less damaging than missed payments. However, your balance may grow, and future affordability could still affect your finances. Always confirm how your servicer will report your status.
Q: Is deferment better than forbearance?
Neither option is always better; it depends on your loans and situation. For some federal loans, especially subsidized loans, deferment can be cheaper because interest may not accrue, whereas it almost always accrues during forbearance. On the other hand, if you do not qualify for deferment, forbearance may still give you temporary relief.
Q: What if I still cannot afford payments after my forbearance ends?
Contact your servicer before the forbearance expires. You may be able to switch to an income-driven repayment plan, request another eligible forbearance or deferment, or adjust your repayment term to lower your monthly payment. Ignoring your loans can lead to delinquency and default, which are much more harmful to your credit and finances.
References
- What is student loan forbearance? — Consumer Financial Protection Bureau. 2023-10-01. https://www.consumerfinance.gov/ask-cfpb/what-is-student-loan-forbearance-en-631/
- Get Temporary Relief: Deferment and Forbearance — Federal Student Aid, U.S. Department of Education. 2024-02-15. https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief
- What are loan deferment and forbearance? — Federal Student Aid, U.S. Department of Education. 2023-09-20. https://studentaid.gov/help-center/answers/article/what-is-loan-forbearance-deferment
- Understanding Student Loan Forbearance — Western & Southern Financial Group. 2023-08-10. https://www.westernsouthern.com/personal-finance/student-loan-forbearance
- Forbearance on Student Loans: What You Need to Know — Higher Education Student Assistance Authority. 2022-11-05. https://www.hescloans.com/blog/forbearance-on-student-loans
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