Student loan forbearance is a program that allows you to temporarily suspend your student loan payments. The government offers several types of federal student loan forbearance, and many private direct lender also offer their own versions of forbearance.
Forbearance is a necessary option for distressed borrowers, but there are some downsides. Here’s what to know about your options and when to suspend your student loans.
What is Student Loan Forbearance?
Student loan forbearance is an option that temporarily suspends your monthly payments. Typically, it’s only available for a few months at a time, and you’re limited in how much forbearance you can use during the term of your loan.
Federal Student Loan Forbearance
When it comes to federal student loans, there are two main types of forbearance options: general and mandatory. Which one is right for you depends on the circumstances that lead you to abstain.
General forbearance, also called discretionary forbearance, is granted and approved by your student loan officer if you are experiencing financial hardship. Loans eligible for general forbearance include the Direct Program, Federal Family Education Program (FFEL), and Perkins Loans.
Your eligibility for this type of forbearance is determined by your loan officer, so it’s not guaranteed – but you’ll have your best chance of being eligible if you can show that medical bills, a job change or other circumstances affect your finances.
General forbearance can be granted for up to 12 months at a time, with a total limit of three years. You can apply for general forbearance using the US Department of Education’s application form.
Unlike general forbearance, mandatory forbearance is guaranteed if you meet the conditions. The circumstances that will grant you forbearance are:
- You serve in AmeriCorps and have received a national award for your service.
- You are performing service under a Department of Defense student loan repayment program.
- You are participating in a medical or dental internship or residency program.
- You are not eligible for military deferment, but you are currently a member of the National Guard and have been activated by a governor.
- Your federal student loan payments exceed 20% of your total monthly gross income.
- You apply for teacher loan forgiveness.
With a few exceptions, mandatory forbearance is only available for Direct Loans and FFEL Program Loans. If you meet any of the conditions, your service agent is required to grant you a forbearance for up to 12 months, although you may request an extension after the initial forbearance expires.
Private Student Loan Forbearance
One of the advantages of federal student loans is that forbearance is standardized across the board for borrowers, and it’s guaranteed if you meet certain conditions. The length of forbearance is also quite generous – up to 12 months in most cases, with the option to request more.
That said, private student loans often offer a forbearance version. It’s common to find forbearances lasting around three months, but the duration and qualification requirements vary by lender. In many cases, lenders do not advertise their exact offers; to see if you qualify or to request a forbearance, you will need to contact your lender. Be prepared to provide proof of financial hardship when applying.
What is administrative forbearance?
While administrative forbearance can refer to a forbearance you sign up for when applying for a federal program, more recently the term has been used to describe government relief for coronavirus student loans.
Millions of federal student loan borrowers have been automatically enrolled in optional forbearance of their principal and interest payments since March 2020. The administrative forbearance period has been extended multiple times by the Department of Education, but is currently due to expire on May 1, 2022.
What is the difference between abstention and adjournment?
Forbearance and deferment are two methods of temporarily suspending your student loans. Here are some of the main differences:
- Accrued interest : Interest accrues during all forbearance periods, but may not accrue for certain types of deferment.
- Eligibility: The deferral is usually guaranteed if you meet the conditions. Certain types of forbearance are at the discretion of your repairer.
- Length: Most forbearances are quite limited, with federal forbearance being limited to 12 months at a time. Some adjournments can last for years.
Deferment is often the best choice for suspending payments, especially for borrowers returning to school, enlisting in the military, or entering a period of unemployment. However, abstaining is also a good option if you do not meet any of the conditions for deferment.
Should you apply for student loan forbearance?
Forbearing is not a long-term solution – and as interest will accrue while you are forbearing, you need to think carefully about whether this is the right choice for you.
That said, student loan expert Mark Kantrowitz says it’s better for a borrower to forbear than to default. When you fail to repay your student loans, your outstanding balance could be turned over to a collection agency and could lead to a possible lawsuit. “Delinquency and default in payment hurt a borrower’s credit ratings, while an authorized deferral or forbearance generally does not affect the credit rating (or if it does, not as much)”, explains Kantrowitz.
Forbearance is not your only defense against student loan default. If you anticipate long-term financial hardship, consider an income-oriented repayment plan to make your federal student loan payments more manageable. You can also refinance your loans to lower your monthly payment.
Whether or not you choose to request forbearance depends on your personal circumstances. If you’re between jobs or undergoing medical treatment for a few months, forbearance may make more sense than changing your repayment plan. If you need more lasting changes to your student loans, consider looking elsewhere.