What Is Forbearance for Student Loans, and How Can It Help You?

Written by Rebecca Safier

August 27, 2020August 27, 2020Student Loan RepaymentFeatured, Student Loans1333Rebecca SafierMichael GalvisSEO

Updated on August 27, 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

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When facing financial hardship, you may have trouble paying bills, including your student loans. In this case, one of your options might be student loan forbearance. But what is forbearance? It’s an agreement between you and your lender that helps you get some breathing room on payments while you get your financial situation in order.

Forbearance can be helpful for student loan borrowers, but it may not always be your best option. To learn more about student loan forbearance and decide if it’s right for you, let’s explore the following questions:

What is forbearance?
How do you get approved for forbearance?
What are the pros and cons of student loan forbearance?
Is student loan forbearance the right choice for you?

What is forbearance?

Forbearance is a protection offered by Federal Student Aid for federal student loans, such as direct subsidized or unsubsidized loans. Some private student lenders offer forbearance plans as well, but they won’t have the same guidelines as federal lenders must follow.

Normally, if you stopped paying your student loans, they would go into student loan default. When you put your federal student loans into forbearance, however, you can postpone your monthly payments without defaulting. Defaulting on federal student loans can drag down your credit score and even lead to wage garnishment, so it’s something you’d want to avoid at all costs.

You should understand that interest will typically continue to accrue on your loans while they are in forbearance, which means you could face an even larger debt when you resume repayment. But that pause in monthly bills might give you the time you need to improve your financial situation. You may also choose to make interest payments during the forbearance period.

How do you get approved for forbearance?

There are two main types of forbearance for federal loans — general and mandatory forbearance — while private student loans fall into a different category altogether. Let’s take a look at all three types:

General forbearance
Mandatory forbearance
Private student loan forbearance

General forbearance

You would request general, also called discretionary, forbearance if you are experiencing any of the following:

You’ve run into financial trouble
You’ve encountered unexpected medical expenses
You’ve lost your job
You’ve been dealing with another challenge that has caused financial hardship

Your loan servicer will decide whether to approve your request. If your request is approved, you could have your payments paused for up to 12 months at a time. If you’re not able to pay after this period is up, you could apply for forbearance again, with a cumulative limit of three years.

You can get general forbearance if you have a direct loan, Federal Family Education (FFEL) Program loan or a Perkins loan (you can no longer take out a new Perkins or FFEL loan, but many borrowers are still repaying these loans).

Mandatory forbearance

If you qualify for mandatory forbearance, your loan servicer is required to grant your request.

You could be eligible if any of the following apply to you:

You’re completing a dental or medical internship or residency and have an eligible loan.
You’re serving in AmeriCorps and have an eligible loan.
You’re activated as a member of the National Guard, but don’t meet the requirements for military deferment.
You’re teaching in a capacity that could qualify you for teacher loan forgiveness.
Your monthly payments for all student loans have been at least 20 percent of your gross monthly income for up to three years.

Mandatory forbearances apply to direct loans and FFEL program loans, with Perkins loans also applicable to a Student Loan Debt Burden forbearance.

As is the case with general forbearance, a mandatory forbearance can be granted for 12 months at a time. You may request another forbearance if you are still experiencing financial difficulties at the end of the first 12 months.

In times of broad economic distress, such as during a serious recession or in the aftermath of a natural disaster, you may have your loans placed under automatic administrative forbearance.

Private student loan forbearance

Forbearance for private student loans is in a different category. There are no overarching guidelines for these loans as there are for federal loans, and each lender will have its own rules regarding forbearance and other programs offered if a borrower is experiencing financial hardship.

Some lenders are likely to be more flexible than others. If you are looking for private loan forbearance, contact your lender directly and see what can be worked out. You may be able to get a short-term forbearance for three to six months, or a longer-term forbearance.

While going through any kind of forbearance approval process, make sure you continue to make your payments until you are officially approved. Missing payments can have a negative impact on your credit, even if you have applied for forbearance.

What are the pros and cons of student loan forbearance?

Student loan forbearance is an option for borrowers who are struggling financially, but it isn’t a perfect solution. Below are some pros and cons of forbearance.

Pros of forbearance

It allows borrowers to get some breathing room on payments when dealing with financial struggles.
It’s a way to avoid default, which has a very negative impact on your credit score.
Although the terms are only for 12 months at a time, you can extend your forbearance period if necessary.

Cons of forbearance

Even though extensions are available, it isn’t a long-term solution for financial difficulties.
Interest typically continues to accrue on the loans while you are in forbearance, which can make for a larger overall loan balance.
Unless you’re applying for a mandatory forbearance, approval is not automatic. In addition, private lenders may not offer forbearance terms as favorable as those for federal loans.

Is student loan forbearance the right choice for you?

Although pausing payments through forbearance could bring you the financial relief you need, it’s only a temporary solution. Eventually, you’ll need to resume payments, and your student loan debt may become even bigger than when you started the period of forbearance.

Here are some alternatives to forbearance for you to consider.

Deferment: Deferment can be a better option than forbearance: It also pauses payments, but you may not have to pay interest on direct subsidized or other types of loans. You can qualify for deferment if you meet certain criteria, such as being unable to find a job, going back to school or serving on active duty in the military.
Income-driven repayment: This adjusts your monthly payments along with your income, and extends your repayment terms to 20 or 25 years. Income-driven plans include Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn and Income-Contingent Repayment. If you still have a balance after your term is up, the rest will be forgiven.
Extended Repayment Plan: This plan lengthens your term to up to 25 years and has you pay a fixed or graduated amount from month to month.
Graduated Repayment Plan: This plan lowers your monthly payments now and gradually increases them over a 10-year term.

Whatever you decide to do with your student loans, make sure to weigh your options before you take action. That way, you can determine the approach that will benefit you the most in the long run.

No matter your situation, you should speak with your loan servicer to review your options and work out a student loan repayment plan that is best for you.

Thinking about paying your student loans off early? Here are four factors to help you decide if this is the right plan for you.

Rebecca Stropoli contributed to this report.

Interested in refinancing student loans?

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Check out the testimonials and our in-depth reviews! ¹ Important Disclosures for Splash Financial. Splash Financial Disclosures Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice. To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit. Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022. ² Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest. Earnest Disclosures Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team. ³ Important Disclosures for CommonBond. CommonBond Disclosures Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Apr 22, 2021 and may increase after consummation. ⁴ Important Disclosures for SoFi. SoFi Disclosures Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi. ⁵ Important Disclosures for Laurel Road. Laurel Road Disclosures All credit products are subject to credit approval. Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com. As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster. Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount. Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate. Interest Rate: A simple annual rate that is applied to an unpaid balance. Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%. KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. This information is current as of April 29, 2021. Information and rates are subject to change without notice. ⁶ Important Disclosures for Navient. Navient Disclosures You can choose between fixed and variable rates. Fixed interest rates are 2.99% – 8.24% APR (2.74% – 7.99% APR with Auto Pay discount). Starting variable interest rates are 1.99% APR to 8.24% APR (1.74% – 7.99% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA. ⁷ Important Disclosures for LendKey. LendKey Disclosures Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution. Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810. As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay. ⁸ Important Disclosures for PenFed. PenFed Disclosures Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.