Student Loan Forbearance: What It Is and When To Use It

Student loan forbearance gives borrowers the ability to put their monthly payments on hold. When a job loss or other unexpected disruption in your income arises, forbearance could help you get through it. If you’re having a hard time making payments, you might consider student loan forbearance as a temporary solution.

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What is student loan forbearance?

Student loan forbearance is a period during which monthly payments are temporarily suspended. Borrowers facing financial challenges or other circumstances may qualify for forbearance. During this time, you won’t need to make payments. This can be a great alternative to missing payments because you can’t afford them. Your account remains in good standing, and you can avoid default.

“The good news is that forbearance doesn’t hurt your credit directly,” explains Erik Kroll, a certified financial planner (CFP) and president of Student Loans Over 50. “The paused payments aren’t reported as missed, so your credit score won’t take a hit.”

Typically, federal student loan forbearance provides borrowers with relief for 12 months. In some cases, you may be able to renew your forbearance for an additional 12 months. However, there is a three-year cumulative limit. 

Private student loan borrowers may have forbearance options, though the timeframe and eligibility can vary by lender. Federal student loan forbearance can be one of two options: general forbearance or mandatory forbearance. 

General vs. mandatory student loan forbearance

Federal student loan borrowers may qualify for a general forbearance in certain situations. But it’s at the sole discretion of your loan servicer.

“For a general forbearance, it's up to your loan servicer to determine if you qualify. Some common reasons for a general forbearance include financial hardship, unemployment or loss of income, and medical issues,” says Robert Farrington, founder of The College Investor.

Mandatory forbearance is more straightforward. If you meet some of the qualifying criteria, your loan servicer must grant you a forbearance, hence the name mandatory forbearance. 

“Examples include serving in a medical or dental internship or residency program, participating in AmeriCorps, or if your total student loan payments equal 20% or more of your monthly income,” Kroll explains. “In those cases, your servicer must approve the forbearance once you qualify.”

If you’re part of the U.S. Department of Defense Student Loan Repayment Program, on National Guard Duty, or pursuing Teacher Loan Forgiveness, you also qualify for a mandatory forbearance. 

While general and mandatory forbearance are the two primary options for federal student loan borrowers, other options have been available on a case-by-case basis, such as administrative forbearances granted during the COVID-19 pandemic and to SAVE Plan participants during legal challenges to that repayment plan.

How to apply for federal student loan forbearance

If you’re experiencing financial hardship or another qualifying event, here’s how to apply for federal student loan forbearance:

1. Check your eligibility: Review the eligibility requirements for general forbearance and mandatory forbearance. Federal student loan borrowers with Direct Loans, Perkins Loans, and Federal Family Education (FFEL) Program loans may qualify for general forbearance at the loan servicer’s discretion. Mandatory forbearance may be an option if you meet specific circumstances and you have Direct Loans and FFEL loans. 
2. Complete a forbearance request form: Student loan forbearance is not an automatic process. You must apply for it. You can complete the General Forbearance Request form or the specific mandatory forbearance application based on your situation, such as the Student Loan Debt Burden forbearance. You can find the various forms at StudentAid.gov or you can reach out to your loan servicer. 
3. Collect documentation: Depending on the type of forbearance you’re requesting, you may need to submit additional supporting documentation. For example, the Student Loan Debt Burden mandatory forbearance notes that you should attach documentation such as W-2s or paystubs. 
4. Submit the forbearance request form: Once you’ve completed your forbearance request form and have attached any necessary documentation, submit the materials to your student loan servicer. 

How does forbearance affect interest and repayment?

During periods of forbearance, student loan borrowers don’t have to make monthly payments for a specific amount of time. Federal student loan forbearance typically is a 12-month period, with the possibility to extend (though there is a three-year cumulative limit). Private student loan forbearance isn’t standardized, so it can vary by lender. 

While you won’t be responsible for payments during forbearance, interest will still accrue during this time.

“This is why opting for forbearance isn’t always a slam dunk,” says Martin Lynch, president at Financial Counseling Association of America. “You can emerge owing much more than when your forbearance began.”

For the majority of federal loans, interest won’t be capitalized at the end of forbearance. But if you have Federal Family Education Loan (FFEL) Program loans that aren’t managed by the U.S. Department of Education (ED) or private student loans, interest may capitalize.

If you have subsidized loans, a deferment could be a better alternative, as the U.S. Department of Education covers your interest while your payment obligations are on hold. So that’s an important consideration when comparing deferment vs. forbearance.

When is forbearance a good idea?

Student loan forbearance can be a much-needed lifeline during certain events, such as a medical leave or other short-term financial issue. It can also be a good option if you’re focused on paying higher-interest debt, such as credit balances.

But if you’re pursuing student loan forgiveness, forbearance may not be the best option for you. 

“Interest still accrues on your student loans while in forbearance,” says Farrington. 

“However, no payments are due. It's also important to note that time in forbearance doesn't count towards long-term IDR-based loan forgiveness nor PSLF.”

As an alternative to forbearance, you can look into an income-driven repayment plan. These plans adjust your monthly payments based on a percentage of your income. 

“For most federal borrowers, an income-driven repayment plan is a far better long-term solution,” advises Kroll. “If your income is low enough, an IDR can reduce your monthly payment to an affordable level, or even to $0, while still keeping you in good standing and progressing toward forgiveness if eligible."