What is student loan forbearance? A federal student loan forbearance program allows borrowers who can’t afford their monthly student loan payments to put their loans on hold for a temporary period. With forbearance, you can make smaller payments than those you make if you were not taking a forbearance.
Most student loan forgiveness lasts three to twelve months. After this period, the loan must be repaid in full.
Forbearance is a form of financial relief for people who have trouble paying back their student loans. It’s designed to help borrowers in specific circumstances, such as unemployment or temporary illness.
There are two main types of forbearance:
Administrative forbearances are granted by your lender, while mandatory forbearances are required under specific laws. Both have different criteria that need to be met before you qualify. You can apply for an administrative forbearance on your own or talk to your lender about getting one if you’re having financial difficulties.
A mandatory forbearance needs to be requested with documentation proving that you meet its requirements—for example, a doctor’s note documenting illness or proof of active military duty during wartime.
Should I use it?
Student loan forbearance can be a useful option if you cannot make your loan payments. Forbearance allows you to pause payments on your federal student loans.
The exact terms of forbearance will vary by lender. If you have federal student loans, there are generally three types of forbearances:
- economic hardship, and
Medical debt relief may include time off due to an illness or injury that prevents you from working full-time.
What are my options?
You have three options to keep paying your loans while forbearing:
(1) You can make interest-only payments.
(2) You can pay your interest in full, and then make lower monthly payments on the principal.
(3) You can pause your payments until you’re ready to resume, which will result in an immediate payment when you start again.
A balloon payment is one big final payment that must be made in full before any future interest accrues. It’s worth noting that if you are granted forbearance, you will still be responsible for paying all fees incurred during that period.
How do I apply for it?
In some cases, like death or total disability, you may not have to pay back your student loans. In most situations, however, you will be obligated to make payments. The government understands that some students cannot make payments while still in school. Therefore, they have developed a way for students to take a temporary break without damaging their credit scores.
The repayment status of your loan will indicate if you are eligible for forbearance or what period you are eligible for forbearance. If no information is present on your repayment status page then you do not qualify for any type of forbearance at this time and should talk with your loan servicer to see if they can offer another option to help prevent defaulting on your student loans.
When will I pay back what I owe?
Your federal student loans may seem to disappear, but don’t worry—they’re still there. What has changed is how often you need to pay them back. If you choose forbearance, you can stop making payments for a set period (the length of which depends on your particular situation).
When that period ends, you’ll start paying your loan(s) again with new monthly installments. In other words, if you take out $10,000 in subsidized loans at 5% interest over ten years, your monthly payment will be about $100.
But if you put those same loans into forbearance for three years while you’re in grad school and make no payments during that time, when those three years are up, your monthly payment will jump to $500 per month until all of those original $10,000 are paid off.