Student Loan Forbearance: Pros, Cons, and How To Apply

At the end of 2024, 2.5 million federal student loan borrowers were in forbearance, according to data from the U.S. Government Accountability Office (GAO). Student loan forbearance helps borrowers who are facing financial difficulties temporarily pause their monthly payments.

While forbearance can be a lifeline for many borrowers, there are important considerations before going this route. Find out how to get temporary relief for your student loan payments and what you should know.

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What is student loan forbearance?

Student loan forbearance is an option if you're having difficulty making payments. Through forbearance, borrowers can typically reduce or pause their monthly payments for a period of time under certain circumstances.

Federal student loans may qualify for either a general forbearance or a mandatory forbearance. Private loan forbearance options depend on the lender. Though federal and private loan forbearance options may differ, you can typically get temporary relief from student loan payments for at least 12 months.

You may be able to renew your federal student loan forbearance, but the benefit has a lifetime cap of three years.

Who qualifies for student loan forbearance?

Federal loan borrowers may be eligible for a general or mandatory forbearance. General forbearance is broader and is sometimes called discretionary forbearance since your loan servicer determines if you're eligible.

You can typically qualify for this type of federal student loan forbearance if you have Direct Loans, Perkins Loans, or loans from the Federal Family Education Loan (FFEL) program and:

• You're experiencing financial hardship.
• You've had a shift in employment status, such as a layoff.
• You're dealing with medical expenses.
• You're experiencing other situations that your loan servicer approves at their discretion.

Depending on the circumstances, your loan servicer may be required to put you in a mandatory forbearance. If you meet the eligibility requirements, you may qualify for a mandatory forbearance in the following situations:

• You're currently serving in an AmeriCorps position.
• You're in the military and qualify for partial repayment through the U.S. Department of Defense Student Loan Repayment Program.
• You're a medical or dental intern or resident.
• You're in the National Guard and have been activated, but you don't qualify for a military deferment.
• Your monthly student loan payments are 20% or more of your monthly gross income.
• Your teaching qualifies for Teacher Loan Forgiveness.

In general, Direct Loan and FFEL borrowers qualify for mandatory forbearance. 

Typically, you must meet the eligibility requirements to get approved for a general or mandatory forbearance. However, there are exceptions.

“It's worth noting that the COVID-related administrative forbearance was not a typical form of forbearance. It was automatic, and interest did not accrue,” says Jen Swindler, a certified financial planner (CFP) and owner of Money Illustrated.

Private loan lenders may offer forbearance if you're facing financial hardship. But the specifics and eligible circumstances aren't uniform.

“Some private lenders offer forbearance, but terms vary widely. Borrowers should contact their lender directly to understand options, eligibility, and terms,” says Erik Kroll, a CFP and president of Student Loans Over 50.

How to apply for student loan forbearance

You must apply and get approved for a student loan forbearance. It's crucial to continue payments as usual until you know if you qualify.

“For federal loans, you'll usually need to apply on your loan servicer's website. You will provide the required documents to prove your eligibility,” says Swindler.

Private student loan forbearance typically has a similar process.

Here's how to apply for student loan forbearance:

1. Review eligibility: If you have federal student loans, review the eligibility requirements for general vs. mandatory forbearance. For private loans, talk to your lender about private loan forbearance options and what it takes to qualify.
2. Fill out the forbearance request form: Each type of federal student loan forbearance has its own specific form to fill out. For private student loan forbearance, reach out to your loan servicer and fill out the relevant form to apply.
3. Gather supporting documentation: In some cases, you may need to submit supporting documentation, such as W-2s, pay stubs, tax returns, or information about your employer.
4. Send materials to your loan servicer: Double-check your application and supporting documentation to make sure everything is complete and accurate. Then submit the items to your loan servicer.
5. Wait to hear back: It may take several days for your loan servicer to review your application. Continue making payments until you hear back. Applying online may help expedite the process.

Does interest accrue during student loan forbearance?

Not making payments on your student loans can give you some breathing room. But it's important to note that the interest on your loans continues to accrue during student loan forbearance. This is true for all loan types, even subsidized loans.

However, there are a couple of exceptions.

“Borrowers who were in the SAVE Plan have been put in a general forbearance with interest not accruing at this time,” says Kroll. Given the legal limbo with the SAVE Plan, borrowers have had their loans put in this status while things get sorted out, and interest isn't accruing. Notably, this forbearance doesn't count toward any loan forgiveness efforts.

During the COVID administrative forbearance from March 2020 to September 2023, federal loan borrowers didn't have to make payments, and interest didn't accrue.

Private loan borrowers in forbearance will generally still have interest add up while not in active repayment.

Does interest capitalize after student loan forbearance?

Once the forbearance period is up, most federal loan borrowers won't have their interest capitalized. However, interest does capitalize if you have loans from the FFEL program that aren't managed by the Department of Education.

If your private student loans are in forbearance, the unpaid interest that accrues may capitalize at the end of the period. Reach out to your loan servicer to find out if this will apply to your loan.

Forbearance vs. deferment: What's the difference?

Federal student loan borrowers can choose between deferment and forbearance to hit the pause button on repayment. However, they're not the same and have some important distinctions.

The most important difference between deferment and forbearance is that deferment may have interest benefits that forbearance doesn't offer.

For example, Direct Subsidized Loan borrowers won't have to pay the interest that accrues while in deferment. Meanwhile, with forbearance, it doesn't matter what type of loan you have — interest will continue to accrue, and you're responsible for it.

Alternatives to student loan forbearance

Student loan forbearance can be an attractive option if you're facing financial difficulties. But your time in federal student loan forbearance generally doesn't count toward student loan forgiveness. So if you're hoping to get your federal loan balance forgiven through Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) forgiveness, the months or years in forbearance are not credited toward your progress.

“Income-driven repayment plans are often a better option, if at all possible. If income is low enough, the payment can even be $0,” says Swindler.

Choosing an income-driven repayment plan can lower your payments to a small percentage of your discretionary income. If you're eligible for $0 payments on an IDR plan, these do count toward loan forgiveness, which is a major benefit.

If you're juggling multiple federal loan payments, loan consolidation is another option. Through a Direct Consolidation Loan, you can merge your payments into one and lower your payments by extending your loan term. However, it's key to understand the drawbacks and what borrower benefits you may stand to lose.

You may also qualify for a lower rate through student loan refinancing if you have strong credit. Additionally, refinancing allows you to change your loan terms, which could mean a more affordable monthly payment with a longer term.

On the other hand, refinancing federal loans means missing out on benefits like access to forgiveness and income-driven repayment plans. Before choosing any alternatives, look at the advantages and drawbacks and consider how each option will affect you in the short and long term.