Student loan forbearance allows borrowers to temporarily stop making payments on federal or private student loans due to financial hardship, unemployment, or other qualifying reasons. It's a short-term pause, typically lasting up to 12 months, that doesn't count as a default.
Forbearance is not automatic. Borrowers must apply through their loan servicer and provide documentation of financial difficulty. Unlike deferment, interest continues to accrue during forbearance, which can increase the total amount owed over time. The option applies to both federal Direct Loans and Federal Family Education Loans (FFEL), though eligibility varies.
Forbearance is often used when income drops unexpectedly, medical expenses arise, or borrowers face job loss. It's not a permanent fix, but a stopgap measure to prevent delinquency during crises. The U.S. Department of Education offers forbearance options under specific conditions, including economic hardship, teaching in high-need areas, or serving in the military.
When a borrower requests forbearance, the loan servicer reviews the application and verifies eligibility. If approved, the servicer suspends monthly payments for a set period-usually 12 months-but interest continues to accumulate on the principal balance. This means the loan balance grows even while payments are paused.
For example, a borrower with a $20,000 federal student loan at 5% interest who enters forbearance for 12 months will see interest accrue at approximately $83 per month. Over a year, that adds $1,000 in new interest. When payments resume, the borrower must repay the original $20,000 plus the additional $1,000.
Unlike deferment, which may offer interest relief for certain loans, forbearance always results in accruing interest. This can lead to negative amortization-where the balance increases because unpaid interest gets added to the principal. That's why forbearance should be used only when necessary and for the shortest duration possible.
There are two main types of forbearance: mandatory and discretionary. Mandatory forbearance is required by law under specific circumstances, such as serving in a national emergency or being a member of the military during active duty. Discretionary forbearance is granted at the lender's discretion based on financial hardship.
| Type | Eligibility Criteria | Duration | Interest Accrual |
|---|---|---|---|
| Mandatory | Active military service, national emergency, teaching in low-income schools | Up to 12 months | Yes |
| Discretionary | Financial hardship, medical bills, job loss | Up to 12 months (renewable) | Yes |
Some borrowers qualify for extended forbearance under special programs. For example, the U.S. Department of Education offered pandemic-related forbearance from March 2020 to December 2022, during which interest was frozen on federally held loans. That program ended in 2023, but similar measures may return under new legislation.
Forbearance is often confused with deferment. While both pause payments, deferment may allow interest to be waived for certain federal loans-like subsidized Direct Loans-where the government pays interest during the deferral period. Forbearance never waives interest, so balances grow faster.
A common mistake is assuming forbearance improves credit scores. It does not. If a borrower misses payments before applying, those late entries remain on the credit report. Forbearance itself is reported as "deferred" or "on hold," but it doesn't erase past delinquencies.
Another misconception is that forbearance resets the loan term. It does not. After the pause ends, repayment resumes on the original schedule. Borrowers who have exhausted all forbearance periods may need to explore income-driven repayment plans or loan forgiveness programs.
Eligibility for forbearance depends on the loan type. Federal student loans-Direct Loans and FFEL-offer forbearance through the Department of Education's guidelines. Private lenders may offer similar options, but terms vary widely.
To apply, borrowers contact their loan servicer directly. The process requires proof of financial hardship, such as pay stubs, tax returns, or letters from employers or healthcare providers. Applications are reviewed within 15 business days. Approval is not guaranteed, especially for discretionary forbearance.
I applied for forbearance during a six-month gap between jobs. My servicer required my last two pay stubs and a letter explaining my employment status. I received approval within 10 days. Payments were paused for 12 months, but my balance increased by $1,400 in accrued interest. I later refinanced to lower the rate and reduce long-term costs.
Forbearance prevents immediate default and protects borrowers from collection actions. It's a tool to avoid deeper financial distress during emergencies. However, it's not a solution for long-term debt management.
According to the National Student Loan Data System (NSLDS), over 1.2 million borrowers used forbearance during the 2020-2021 academic year. Many cited job loss or reduced hours due to the pandemic. Without this option, many would have defaulted on loans they couldn't afford.
Forbearance is not a substitute for sustainable repayment strategies. Borrowers should plan for resuming payments and consider alternatives like income-driven repayment, which caps monthly payments at a percentage of discretionary income. These plans can reduce monthly burdens and qualify for eventual loan forgiveness after 20-25 years of payments.