5 min
Student Loan Forbearance Explained: Pros, Cons, and Eligibility
Student loan forbearance is a temporary option to pause or reduce monthly payments when you’re experiencing short-term financial hardship. It’s not meant to be a long-term solution and should be used cautiously, as interest typically accrues and progress toward forgiveness may pause. Forbearance can prevent default but is best reserved for one-off emergencies when other options, like deferment or income-driven repayment, aren't available.
Summary
Student loan forbearance is a temporary option to pause or reduce monthly payments when you’re experiencing short-term financial hardship. It’s not meant to be a long-term solution and should be used cautiously, as interest typically accrues and progress toward forgiveness may pause. Forbearance can prevent default but is best reserved for one-off emergencies when other options, like deferment or income-driven repayment, aren't available.
⏸️ What Is Student Loan Forbearance?
Student loan forbearance allows you to pause or reduce your federal loan payments temporarily, usually for up to 12 months at a time. It’s often used during brief periods of financial difficulty. However, it comes with important drawbacks. For one, interest continues to accumulate on most loans during forbearance, which can increase your overall debt. Additionally, time spent in forbearance typically doesn’t count toward loan forgiveness programs. Because of these trade-offs, forbearance should be viewed as a last resort — not a go-to strategy for long-term affordability.
Takeaways:
• Use forbearance only if you can’t pay, expect to resume within a year, and don’t qualify for deferment.
• Interest accrues during forbearance, increasing the amount owed over time.
• Forbearance pauses progress toward Public Service Loan Forgiveness and other forgiveness programs.
Key Terms
• Forbearance: A temporary pause or reduction in loan payments.
• Deferment: A payment pause that typically doesn’t accrue interest on subsidized loans.
• Loan Servicer: The company that manages your loan payments and application processes.
📋 Types of Federal Student Loan Forbearance
There are three main types of federal student loan forbearance: general, mandatory, and administrative. General forbearance, also called discretionary forbearance, is up to your loan servicer and usually requires proof of financial hardship. Mandatory forbearance must be granted if you meet certain conditions, such as serving in AmeriCorps, a medical residency, or having a high student loan burden. Administrative forbearance is automatically applied by the Department of Education, often due to policy changes or emergencies, like the COVID-19 pandemic or ongoing legal issues with the SAVE plan.
Takeaways:
• General forbearance is based on financial hardship and is limited to 3 years total.
• Mandatory forbearance must be granted if you qualify based on specific federal programs or roles.
• Administrative forbearance is applied automatically in special cases.
Key Terms
• General Forbearance: Discretionary payment pause granted by your servicer.
• Mandatory Forbearance: Required pause for eligible borrowers under specific conditions.
• Administrative Forbearance: Automatically applied pause due to policy or legal changes.
📝 How to Apply for Forbearance
To request federal forbearance, you must fill out and submit the appropriate form to your loan servicer. First, determine which type of forbearance you need — general or mandatory. Then, complete the relevant form and include any supporting documentation. Contact your servicer to confirm the best way to submit your paperwork, whether online or by mail. Be sure to continue making payments until your request is officially approved to avoid delinquency or default.
Takeaways:
• Choose the appropriate forbearance type and complete the related form.
• Submit supporting documents as required by your servicer.
• Keep making payments until approval is confirmed.
Key Terms
• Forbearance Request Form: The document required to initiate a forbearance request.
• Supporting Documentation: Evidence such as income statements or program participation.
🏦 Private Student Loan Forbearance
Private student loan lenders may also offer forbearance, but terms vary by lender. Most allow up to 12 months of paused payments, though interest will still accrue. It’s best to review your loan documents or contact your lender directly to understand your options. Some private lenders also offer alternative relief, such as temporary interest-only payments. Keep in mind that private loan forbearance doesn’t follow the same rules or benefits as federal forbearance.
Takeaways:
• Private forbearance terms vary by lender and loan agreement.
• Interest accrues during private loan forbearance, just like with federal loans.
• Check with your lender about alternative relief options.
Key Terms
• Private Loan Forbearance: Temporary payment pause offered by a private lender.
• Interest-Only Payments: A relief option where you pay only interest temporarily.
⏳ SAVE Forbearance and Lawsuits
Currently, borrowers in the SAVE income-driven repayment plan are in automatic forbearance due to ongoing legal challenges. This SAVE forbearance is a type of administrative forbearance — you don’t need to apply. During this time, no interest accrues. However, you won’t receive credit toward forgiveness programs like PSLF or IDR forgiveness unless you resume payments or switch plans. If you’re not working toward forgiveness, it may be smart to make payments anyway, since doing so can reduce your debt faster while no interest is building up.
Takeaways:
• SAVE forbearance is automatically applied due to lawsuits.
• No interest accrues during this forbearance period.
• PSLF/IDR forgiveness credit does not accrue unless payments resume.
Key Terms
• SAVE Plan: An income-driven repayment plan currently impacted by lawsuits.
• Administrative Forbearance: A pause automatically applied by the government.
🤔 Should You Use Forbearance?
Forbearance may be a lifesaver in a short-term financial crisis, but it’s not without downsides. If you do use it, try to continue making interest payments to prevent your loan balance from growing. If you’re considering forbearance repeatedly or for extended periods, it may signal that other options — like income-driven repayment — would serve you better. Consider forbearance only if deferment is not available and your financial strain is temporary.
Takeaways:
• Use forbearance only for short-term, one-time financial emergencies.
• Try to make interest payments during forbearance to avoid increased debt.
• Explore deferment and IDR plans before applying for forbearance.
Key Terms
• Interest Capitalization: Unpaid interest added to the loan principal after forbearance.
• Delinquency: Failure to make a loan payment on time.
Conclusion
Student loan forbearance is a helpful but limited tool for those facing temporary hardship. It's not ideal for long-term financial relief due to interest accumulation and stalled progress toward forgiveness. If you’re struggling with payments, always consider deferment or an income-driven repayment plan first. Forbearance can help you avoid default, but it’s best used strategically and sparingly.
