What is forbearance in student loans?

Student loan forbearance is a temporary suspension or reduction of your student loan payments. It is different from student loan deferment, which is a postponement of your loan payments for a specific period.

Borrowers can apply for forbearance if they are going through a period of financial difficulty.

Forbearance generally lasts no more than 12 months, after which you resume regular monthly payments. You will also need to pay the amount that was due during the forbearance period. This can be either as a lump sum, installments in the form of surcharges to your regular monthly bill, or additional payments at the end of your loan term. Interest is also applied to the repayment sum. Forbearance is only offered on request, though there is no guarantee that you will get it. 

There are two kinds of student loan forbearance:

General forbearance: The loan servicer may ease loan repayments during times of financial hardship like loss of a job, reduced income, or high expenses. You may be able to reduce or pause payments for up to 12 months, after which you can ask for another forbearance. Some servicers limit the number of forbearances to three years over the loan term.

Mandatory forbearance: The loan servicer has to accept your request for forbearance if:

• Your payments are over 20% of your income
• You qualify for loan forgiveness as a teacher
• You are enrolled in the loan repayment program of the Department of Defense
• You’re in a medical or dental internship or residency
• You serve in qualifying volunteer-based programs

Forbearance is a good option if you are going through temporary financial hardships. You need to have a plan for when you resume repayments at the end of the forbearance period because you will need to make those additional payments along with the existing monthly payments. Apart from this, you also need to cover the accrued interest which further increases the debt you owe.

On March 13, 2020, the United States Department of Education enacted administrative forbearance which paused payments until October 1, 2023. This move was part of providing borrowers who might have already been dealing with financial difficulties due to the COVID-19 pandemic. Interest did not accrue on the unpaid debt for three and a half years until September 1, 2023. Payments restarted in October 2023.