What Is Student Loan Forbearance? Meaning, Types, and Options

Borrowers facing a financial squeeze may be able to get a temporary break on repaying a student loan with a student loan forbearance. But the catch is they could end up owing more. That’s because interest accrues on nearly all federal student loans in forbearance and on all private student loans.

Even though a temporary payment reprieve through forbearance may bring short-term relief, it might be worth exploring alternatives, especially since the amount of time a borrower can be in forbearance will be shortened for loans issued after July 1, 2027, due to recent legislation.

Read on to learn how student loan forbearance works — and other options for managing student loan payments.

What Does Student Loan Forbearance Mean?

Forbearance for student loans is a temporary pause of student loan payments (or temporary reduction of payments) under certain qualifying circumstances. Forbearance is available for federal student loans, and it may be available for private loans, depending on the lender.

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

General Forbearance

With general forbearance, sometimes called discretionary forbearance, your loan servicer will decide whether or not to grant a request for forbearance if a borrower is unable to afford their loan payments.

General forbearance is available for federal Direct Loans, Federal Family Education Loan (FFEL) Program loans, and Perkins Loans issued before July 1, 2027 for up to 12 months at a time. Borrowers still experiencing hardship when the forbearance period expires can reapply and request another general forbearance over a cumulative limit of three years.

If you borrow a loan after July 1, 2027, however, you can only use forbearance for up to nine months during any 24-month period.

Mandatory Forbearance

Your loan servicer is required to grant you federal forbearance if you meet certain criteria including:

•   You are serving in a medical or dental internship or residency program, and you meet certain requirements.

•   The total amount you owe each month for all federal student loans is 20% or more of your total monthly gross income, for up to three years.

•   You are serving in an AmeriCorps position for which you received a national service award.

•   You are performing a teaching service that would qualify you for teacher loan forgiveness.

•   You qualify for partial repayment of your loans under the Department of Defense Student Loan Repayment Program.

•   You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.

Direct and FFEL loans qualify for mandatory forbearance for any of the above reasons. Perkins Loans also qualify if a borrower has a heavy student loan debt burden.

Mandatory forbearance is to be granted for no more than 12 months at a time for loans issued before July 1, 2027, but it can be extended if a borrower continues to meet eligibility requirements.

As mentioned, forbearance will be capped at nine months in any two-year period for loans issued after July 1, 2027.

Recommended: What Is Administrative Forbearance for Student Loans?

Private Student Loan Forbearance Options

Some private lenders offer forbearance, but they are not required to do so. For lenders that do offer forbearance, the time limits and terms vary. Borrowers with private student loans can check with their lender or review their original loan agreement to see if forbearance is an option.

Borrowers having trouble making student loan payments should contact their private lender immediately. It’s important to get in touch with a loan provider before missing payments and to avoid a loan going into default. The lender might offer options such as interest-only payments, interest-free payments, or a change in interest rate.

How Long Does Forbearance Last?

As noted above, forbearance for loans issued before July 1, 2027 is available for up to 12 consecutive months at a time within a three-year cumulative limit.

But for loans issued on or after July 1, 2027, forbearance will undergo changes that shorten the forbearance time period under what the Education Department calls the “final rule” to carry out education reforms in the Trump administration’s Working Family Tax Cuts Act.

The new rules state that for loans taken out on or after July 1, 2027, borrowers can apply for general forbearance of up to 9 months within a 24-month period.

Who Should Use Student Loan Forbearance?

Forbearance on federal student loans may be a good choice for borrowers that don’t qualify for student loan deferment or an income-driven repayment plan, and whose hardship is temporary.

Like forbearance, student loan deferment offers the opportunity to temporarily press pause on student loan payments. However, there is a key difference between deferment and forbearance: During deferment, borrowers may not have to pay the interest that accrues on Direct Subsidized Loans, Federal Perkins Loans, and the subsidized portion of Direct Consolidation Loans or FFEL Consolidation Loans. With forbearance, borrowers pay the interest that accrues on nearly all federal student loans.

For loans issued after July 1, 2027, economic hardship deferment and unemployment deferment will no longer be available.

With private student loans, borrowers struggling to make payments can contact their loan servicer to seek a solution. If a lender offers a temporary pause on payments, interest typically accrues and it is the borrower’s responsibility.

Recommended: Student Loan Grace Period

Is Student Loan Forbearance Bad?

Generally speaking, as a stopgap measure, student loans forbearance is not “bad,” especially if it helps prevent a borrower from having late payments or a loan default on their credit reports. Most federal student loans enter default when payments are 270 days past due, but federal Perkins Loans and private student loans can go into default after just one missed payment.

If you default on a student loan, the entire balance of a federal student loan (principal and interest) becomes immediately due.

If your federal student loan is in collections, and you do not enter into a repayment agreement or you renege on the agreement, the collection agency can garnish your wages — up to 15% of your disposable pay.

As if that weren’t enough of a deterrent, borrowers in default may have part or all of their tax refund taken and applied automatically to federal student loan debt.

Private student loans typically go into default after approximately 90 days. The lender may hire a collection agency or file a lawsuit.

Recommended: Private Student Loans Guide

Pros and Cons of Student Loan Forbearance

Postponing your student loan payments has advantages and disadvantages.

Pros

Some of the potential benefits of forbearance include the following.

•   Forbearance may help borrowers avoid the negative financial impact of going into default, including the risk of having their wages garnished.

•   It does not typically impact credit scores because the missed payments are not reported on credit reports.

•   It can give a borrower a chance to catch their breath when money is tight.

Cons

There are also drawbacks to forbearance, such as:

•   Interest will typically accrue during forbearance, which means borrowers will likely have a larger loan balance waiting for them when they resume repayment.

•   For those pursuing federal student loan forgiveness, any period of forbearance probably will not count toward their forgiveness requirements.

•   It’s a short-term solution, typically 12 months for loans issued before July 1, 2027, though a borrower can renew if they are still struggling to pay their loans.

•   For loans issued after July 1, 2027, forbearance will be capped at nine months in any 24-month period.

Alternatives to Forbearance

Forbearance isn’t a borrower’s only recourse. Individuals struggling to pay their student loans may want to consider other ways to potentially lower their monthly payments, such as exploring different student loan repayment options.

Income-Driven Repayment

If a borrower is having trouble making student loan payments because of circumstances that may continue for an extended period, or if they are unsure when they’ll be able to afford to resume payments, one option is an income-driven repayment (IDR) plan.

On an IDR plan, monthly payments are determined by your discretionary income and family size. And after 20 or 25 years of regular, on-time payments on the Income-Based Repayment (IBR) plan, any remaining loan balance may be forgiven.

For loans issued on or after July 1, 2026, borrowers have a new option, called the Repayment Assistance Plan (RAP). On this plan, payments are based on your adjusted gross income (AGI). RAP will forgive any remaining balance after 30 years of payments.

Student Loan Refinancing

Student loan refinancing is another option to consider. With refinancing, a borrower replaces their existing student loans with a new private loan from a private lender. Ideally, the new loan would have a lower interest rate, which may reduce the borrower’s payments.

Borrowers refinancing student loans may also be able to change the length of the loan to lower their payments. However, they may pay more interest over the life of the loan if they refinance with an extended term.

It’s important to note that refinancing federal student loans makes them ineligible for federal benefits like income-driven repayment, forgiveness, and federal forbearance.

The Takeaway

Student loan forbearance is a way to temporarily suspend loan payments when a borrower is struggling to make them. But in almost all cases, interest will accrue and be added to the loan. Alternative options borrowers may want to explore include student loan deferment, income-driven repayment, or refinancing.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How does student loan forbearance work?

Student loan forbearance is a temporary suspension of loan payments due to financial hardship. It allows borrowers to pause payments for a specified period, which is up to 12 months for loans issued before July 1, 2027. For loans issued after July 1, 2027, forbearance will be capped at nine months in any two-year period.

Does interest accrue on student loans during forbearance?

Interest accrues on nearly all federal student loans and on all private student loans during forbearance. That potentially increases the loan balance when the borrower’s payments resume.

What are the alternatives to student loan forbearance?

Alternatives to forbearance include income-driven repayment, which bases monthly payments on income and family size; federal student loan deferment, which is a temporary pause on payments in which interest may not accrue on certain federal loans; and student loan refinancing, which may offer lower interest rates to borrowers who qualify, but requires giving up federal benefits when refinancing federal student loans.

Does student loan forbearance affect your credit score?

Generally speaking, federal student loan forbearance should not impact your credit score. While payments are paused during forbearance, lenders report your federal loans as being in good standing to the credit bureaus. As long as you abide by the repayment schedule once federal forbearance ends, credit scores generally should not be impacted. However, private loans in forbearance may be reported differently to credit bureaus, depending on the lender and the loan agreement. Contact your lender for more information.

What is the difference between student loan forbearance and deferment?

The main difference between federal student loan forbearance and deferment is that during deferment, borrowers may not have to pay the interest that accrues on certain types of federal loans, including Direct Subsidized Loans. With forbearance, borrowers pay the interest that accrues on nearly all federal student loans.

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