Student Loan Forbearance: A Comprehensive Guide
Millions of borrowers turn to student loan forbearance for short-term relief when facing financial or personal challenges. Student loan forbearance allows you to pause or reduce your student loan payments for a limited period of time. It can be a safety net if you’re in a temporary bind, but it comes with long-term costs many borrowers underestimate. And for many borrowers, it may not be the best option - getting on an income-driven repayment plan may be smarter. This article provides a comprehensive overview of student loan forbearance, including how it works, its advantages and disadvantages, eligibility requirements, and alternative options for managing student loan debt.
Understanding Student Loan Forbearance
Student loan forbearance is a temporary pause or reduction in your monthly loan payments, usually granted when you’re experiencing short-term financial hardship, job loss, or medical challenges. Sometimes the forbearance is required by the government - such as the current SAVE forbearance. Forbearance lets you pause student loan payments temporarily, but interest continues to accrue during that time. It should only be used for short-term hardship, since repeated or extended forbearance can increase your loan balance.
While forbearance stops your required payments, interest continues to accrue. Once the forbearance period ends, that interest is often capitalized (added to your loan balance) which means you’ll end up paying interest on that interest later. Because of this, forbearance is best viewed as a short-term relief tool, not a long-term repayment strategy.
Federal vs. Private Student Loan Forbearance
Federal student loans offer more standardized and transparent forbearance options than private lenders.
| Loan Feature | Federal Loan | Private Loan |
|---|---|---|
| Availability | Yes, multiple options | Depends on lender policies |
| Duration | Currently Up To 3 Years, New Caps In 2027 And Beyond | Varies, Often 3-12 Months |
| Interest | Always Accrues | Always Accrues |
Private lenders are not required to offer forbearance, but some may allow temporary payment pauses or interest-only periods. Always confirm the terms and the impact on interest before agreeing.
Read also: Student Accessibility Services at USF
Forbearance vs. Deferment
When it comes to federal student loans, forbearance and deferment both pause payments - but the interest rules differ.
| Header | Forbearance | Deferment |
|---|---|---|
| Interest on Subsidized Loans | Interest Accrues | Government Waives |
| Interest on Unsubsidized Loans | Interest Accrues | Interest Accrues |
| Typical Use Cases | Financial Hardship | In-School, Military Service |
For private loans, “deferment” and “forbearance” often mean the same thing - always confirm whether interest will continue to accrue. Student loan deferment allows borrowers to temporarily pause monthly payments, typically for up to three years.
Types of Federal Student Loan Forbearance
There are two types of federal student loan forbearance: general and mandatory.
General Forbearance
Also known as discretionary forbearance, general forbearance is available to you if you can’t make your payments due to medical expenses, financial difficulties, employment change, or other reasons that the federal student aid office may accept. You have to apply for this type of forbearance, and your servicer has the authority to deny your application at their discretion. You can request a general forbearance if you can’t pay your federal student loans because of temporary financial, medical, or employment reasons. General forbearances are available for Federal Direct Loans, FFEL Program loans, and Perkins Loans and can last for up to 12 months at a time.
Mandatory Forbearance
If you qualify for this type of forbearance, your servicer cannot deny your request. Mandatory forbearance for federal loans means your servicer must accept your application if you fit the criteria and is granted for up to 12 months at a time. You can request an extension if you still qualify after 12 months. Below are the examples of eligibility scenarios for mandatory forbearance according to the Federal Student Aid. Direct Loans and Federal Family Education Loans are eligible for mandatory forbearance.
Read also: Guide to UC Davis Student Housing
Is Forbearance the Right Choice?
It might be tempting to jump at the chance to not make any payments for any amount of time. But we suggest taking a close look at your situation before you leap. Consider the following questions:
- Why do you want to delay payments?
- Are you looking for a short-term or long-term solution?
- Can you use deferment instead?
- Is there anything else in your budget you can cut first?
- Would you benefit more from one of the federal repayment plans?
Depending on your answers, you may decide to pursue forbearance. If you’re starting to think it’s not right for you, don’t despair - there are other options, most notably for federal loans.
Strict Forbearance Rules Coming in 2027 (OBBBA)
Major changes are on the horizon. Starting July 1, 2027, new borrowers will face stricter limits under the One Big Beautiful Bill Act (OBBBA).
New Rule: Borrowers who receive federal student loans on or after July 1, 2027, can only receive up to 9 months of forbearance during any 24-month period.
What This Means: Forbearance will still exist but it’s being narrowed to short-term use only. The goal is to prevent repeated “forbearance drift,” where borrowers cycle in and out of repayment without reducing their balance. Critics argued past policies allowed borrowers to pause payments indefinitely, even enabling “Borrow and Die” strategies where balances were never paid off. The OBBBA rules encourage borrowers to use income-driven repayment instead of long-term pauses that inflate total loan costs.
Read also: Investigating the Death at Purdue
Better Alternatives to Forbearance
If you need a more sustainable plan, explore these options:
- Income-Driven Repayment (IDR): Caps payments at 5-15% of your discretionary income, with forgiveness after 20-25 years. Student debt holders who had an income-driven repayment (IDR) plan were less likely to expect that they will be delinquent in the next three months (13.0 percent versus 14.6 percent) on any debt payment.
- Extended Repayment Plan: Spreads payments up to 25 years, lowering your monthly amount.
- Refinancing: Can lower your interest rate and simplify multiple loans into one payment (best for borrowers with stable income and good credit). With refinancing, you can take your mix of loans (private and federal) to a private lender or bank who will then pay them all off for you. Now, instead of owing on lots of different loans, you just owe one lender. And like with consolidation, you can also use refinancing to kick your variable interest rate to the curb in favor of a predictable, fixed rate.
Student Loan Forbearance During the Pandemic
The pandemic definitely threw some serious wrenches in just about everyone’s financial plans. And since people were too busy trying to cover the necessities to worry about their student loans, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to offer some relief.
As part of the CARES Act, the federal government issued an “administrative forbearance” on federal student loans, which is just a fancy way of saying your federal student loan payments have been on hold since March 2020. Student loan relief has been extended several times, but it’s finally going to end on December 31, 2022-which means you need to be ready to start making payments again in the new year. Or better yet, if you’re in a position to start making payments now, do it!
Also through December 31, 2022, the federal government has set the federal student loan interest rate at 0%. This applies to defaulted and non-defaulted Direct Loans, Federal Family Education Loans and Federal Perkins Loans. If you’re not sure what type of loan you have or if your loan is covered, call your loan servicer and ask. But the best part is that any payments you make during the pause will go directly toward your principal. Since the interest rate for student loans is currently at 0%, your loans aren’t accruing any interest during the pause. So, come January 1, if you haven’t paid on your student loans, they won’t be any larger than when you left them.
Student debt forbearance relief during the pandemic has been instrumental in staving off student loan delinquencies and defaults, which previous research has linked to delays in homebuying and other measures of financial stress. Private student loans are not eligible for this relief while most federal student loans are. Exceptions are certain FFEL, Perkins and HEAL loans.
Impact of Discontinuing Student Debt Relief
With the end-date of the student loan relief drawing near, a key question is whether and how the discontinuation of student debt relief might affect households. Our analysis suggests that the scheduled discontinuation of student debt forbearance will likely increase financial hardship and delinquency rates. Borrowers currently availing themselves of student debt forbearance expect a 16 percent chance of delinquency if relief is discontinued. Assuming a zero-delinquency rate among those not currently receiving student debt relief, this suggests an overall borrower delinquency rate of 10 percent, a return to two-thirds of the pre-pandemic student loan delinquency rate of 15.6 percent of borrowers.
We also find that this hardship in repayments will not affect all borrowers evenly. Rather, we find that lower-income, less educated, non-white, female and middle-aged borrowers will struggle more in making minimum payments and in remaining current. Borrowers who do not have an IDR plan are expected to be relatively worse off, likely because the IDR allows payments to be more manageable amid income fluctuations.
Frequently Asked Questions
Does student loan forbearance affect your credit score?
Not directly - forbearance itself doesn’t appear as negative information on your credit report. However, if you miss payments before your forbearance is approved, those missed payments can hurt your credit score. Always confirm your forbearance start date with your servicer.
How long can you stay in student loan forbearance?
Federal forbearance typically lasts up to 12 months at a time and can be renewed for a total of three years. Under the OBBBA rules starting in 2027, new borrowers will be limited to 9 months within any 24-month period.
Does interest accrue during forbearance?
Yes - interest always accrues on both subsidized and unsubsidized loans during forbearance. If you don’t pay it off, that interest is added to your loan balance when forbearance ends (a process called capitalization).
What’s the difference between forbearance and deferment?
The main difference is that in deferment, the government may pay the interest on certain loans (like Direct Subsidized Loans), while in forbearance, you’re responsible for all interest. Deferment is usually tied to school, unemployment, or military service.
Can I qualify for Public Service Loan Forgiveness (PSLF) while in forbearance?
No. First, you're not making payments in forbearance. If you do make a non-required payment during forbearance, they do not count toward PSLF’s 120 qualifying payments. If you’re pursuing forgiveness, avoid unnecessary forbearance periods.
What should I do if I can’t afford my student loan payments long-term?
If your financial challenge is ongoing, look into income-driven repayment (IDR) plans instead of forbearance. IDR plans base payments on your income and family size, and may lead to loan forgiveness after 20-25 years.
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