What's Student Loan Forbearance? 

Are you having trouble finding your first job after college? Did the startup you joined fold after only six months with no warning? Or are your struggling to pay your rent and make your car and student loan payments? Whatever the reason for your financial challenges, you might qualify for student loan forbearance.

Forbearance allows you to temporarily stop making payments on your federal student loans or to temporarily reduce your monthly payment. Wondering if forbearance is right for you? Here's what you need to know:

Types of forbearance for federal student loans

There are two types of student loan forbearance: general forbearance and mandatory forbearance.

General, or discretionary, forbearance is when your student loan servicer has the discretion to decide whether or not to grant you forbearance. You can request general student loan forbearance if you’re temporarily unable to make your payments because you're experiencing certain kinds of financial difficulties. All federal loans — including Direct Loans, Federal Family Education Loans (FFEL) and Perkins Loans — are eligible for general forbearance.

General forbearance can only be granted for up to 12 months at a time but can be extended if you’re still experiencing financial difficulties after your forbearance expires. With Perkins Loans, you can only get general forbearance for three years; there is no maximum limit of time you can get forbearance on other types of loans.

The second type of student loan forbearance is mandatory forbearance. Under this type, your loan servicer must provide you with forbearance because you meet one of the mandatory forbearance requirements. Mandatory forbearances can be granted for up to 12 months at a time, but you can request another forbearance period if you're still eligible after that period of time expires.

Eligibility for student loan forbearance

Wondering if you're eligible for forbearance? When it comes to general forbearance, student loan borrowers can request it if you are experiencing:

• Financial challenges
• Medical expenses
• A job change
• Other reasons that your loan servicer approves

When it comes to mandatory forbearance, you’re eligible for forbearance if:

• You're in a medical or dental internship or residency (this is only for Direct and FFEL loans)
• The total you owe for all your student loans is 20% or more than your gross monthly income
• You're serving in the AmeriCorps
• You’re teaching in a job that makes you eligible for teacher loan forgiveness
• You qualify for partial repayment of your loans via the U.S. Department of Defense Student Loans Repayment Program
• You’re a member of the National Guard and have been called up by a governor

The process of applying for forbearance

If you're interested in requesting student loan forbearance, you need to prove that you meet the eligibility requirements.

For a General Forbearance Request, you'll need to fill out a single form, while a Mandatory Forbearance Request requires the completion of a form that's specific to the type of forbearance.

If you’re requesting a general forbearance, you’ll then have to wait to hear back from your student loan servicer to see if they will approve your request. While you're waiting for approval of either type of forbearance, you should still make loan payments to avoid the loan becoming delinquent and the risk of defaulting on the loan.

The impact on your loan interest

During forbearance, your principal balance payments will decrease or stop, but interest will continue to accumulate. This means that the total amount you owe could significantly increase during this period of time, depending on how long your loans are in forbearance. For this reason, you could consider making interest-only payments.

The impact of forbearance on your credit score

While your student loan forbearance will be cited on your credit report, it will not affect your credit score. However, if you’re late making payments prior to getting your forbearance approved, your score will suffer. Getting forbearance on your loans is a tool to protect your credit score.

Alternatives to forbearance

An alternative to student loan forbearance is deferment, during which you won't have to pay interest on subsidized loans. You're eligible for deferment if you're: enrolled in school or in a graduate fellowship program; receiving cancer treatment; taking part in a rehab program if you're disabled; unemployed; working in the Peace Corps; or serving active military duty, among other reasons.

Another alternative to forbearance is an income-driven repayment plan. If you're struggling to make your monthly payments, you may be eligible for a student loan repayment plan which limits your monthly payments to 10-20% of your discretionary income every month. With these programs, after 20 to 25 years of on-time payments, your loans could qualify for forgiveness.

Finally, if you're struggling to repay your federal student loan balance, you could consider refinancing them with a private lender.¹ If your income and credit score have improved since you first took out your loans, you could potentially reduce your interest rate, saving money over the life of the loan and possibly reducing your monthly payment.

Another option when you refinance is to extend the length of your loan term, which would also reduce your monthly payments but may increase the amount you owe over the life of the loan.

When you refinance federal student loans with a private lender, you will lose the protections and programs that federal government loans offer, including the potential to apply for income-driven repayment plans, or access student loan forgiveness programs.

Do private student loans offer forbearance?

Forbearance is generally only offered for federal student aid loans. However, some private student loan lenders offer their own versions of deferment or forbearance. For example, some lenders might allow you to pause payments while you're completing a medical residency or internship, returning to school, or struggling with your payments due to financial hardship, job changes, or medical bills.

Before refinancing your federal student loans with a private lender, check to see if your lender offers any type of deferment or forbearance and the criteria for it.

Ready to ease the burden of student loan payments?

If you’re struggling to make your student loan payments each month, we may be able to help. Get more information about student loan refinancing and student lending here. You can also call 1-888-411-0266 to speak with one of our Student Lending Specialists.