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Student loan forbearance is a temporary way to lower or stop making payments. It's not a long-term affordability strategy or a method to delay repayment indefinitely.
And that means very few people should use it.
Think of forbearance as a last resort to avoid student loan default. Use it only if all the following are true:
You can’t pay your loans.
You don’t expect to wait long to restart repayment.
You won’t qualify for deferment, which is a better option for pausing repayment.
If you’re worried about affording your federal student loans in the long run, opt for an income-driven repayment plan instead to keep your payment amount manageable.
What is student loan forbearance?
Student loan forbearance is an option that lets you temporarily pause or reduce your monthly payments.
Federal student loan forbearance usually lasts 12 months at a time and has no maximum length. That means you can request forbearance as many times as you want, though servicers may limit how much you receive.
There are three overarching types of federal student loan forbearance: general, mandatory and administrative. Here’s when you would use each one.
Many private lenders offer student loan forbearance as well. This is usually for a total of 12 months, but there’s no standard or required amount. Look at your loan’s paperwork or contact your lender to learn about your forbearance options and the application process.
Is student loan forbearance bad?
When you put loans in any type of forbearance, interest continues to accrue on your balance. That interest is capitalized, or added to your balance, at the end of the forbearance. This increases the amount you end up repaying.
Because forbearance is often available to anyone with financial difficulties — and there’s no limit to how long you can get it for — these costs can really add up over time.
For example, after putting $30,000 in loans on hold for 12 months at 6% interest, $1,800 worth of interest would have accrued. Now, you’d owe $31,800, and future interest would accrue on that higher balance. Estimate how much a forbearance could cost you with this calculator.
Department of Education calls for an end to “forbearance steering”
Millions of borrowers are expected to benefit from one-time fixes that count past payments toward the 240 or 300 needed to qualify for income driven repayment forgiveness, the Department of Education announced on April 19. The changes also include an end to “forbearance steering,” a practice in which loan servicers are accused (and were sometimes found guilty of) steering borrowers into short-term, costly options like forbearance.
The department estimates 13% of all borrowers with direct student loans used forbearances between July 2009 and March 2020 for at least 36 months. Borrowers with forbearances of more than 12 consecutive months or 36 months total will see those months retroactively count toward income-driven repayment forgiveness; the change will be applied automatically later in 2022.
To end the practice, the department plans to engage in further oversight and review of forbearance use and servicers’ practices, including restricting servicers’ ability to enroll borrowers in forbearance through text or email.
Who should use student loan forbearance?
Student loan forbearance is a quick fix, but its costs make it a less-than-ideal repayment option. Choose forbearance only for short, one-off financial crises, like when you need money for a big auto repair or medical bill.
If forbearance makes sense for you, opt to reduce your payments — instead of stopping them altogether — or to at least pay the interest that accrues before it capitalizes. This will help prevent a tough financial situation from getting worse.