Forbearance lets you postpone repayment, just like deferment. But there are two key differences. One difference is that you may qualify for forbearance even if you don’t qualify for one of the more specific deferments. In most cases, forbearance is granted solely at the discretion of your loan servicer and they all have different allowances.
A disadvantage of using forbearance is that interest continues to build up on all your loans, including subsidized loans. If you have a choice, and especially if you have subsidized loans, it's usually best to apply for deferment or, even better, a lower payment option, first.
Things to know:
- Granted by your lender or servicer.
- Usually reserved for cases of financial hardship or illness.
- Interest continues to build up on your loan during forbearance and is capitalized at the end of the forbearance period. In other words, forbearance increases the amount you owe.
Is interest paid for me?
During deferment, the federal government may pay the interest adding up on some kinds of loans. During forbearance, interest still builds up on all loans.
That means forbearance always costs money. It may still be right for you, but it's not free.
For example, if you have a $10,000 subsidized loan at 6.8% interest and wanted to postpone payments for a year, you'd owe the same $10,000 if you used deferment, but $700 more if you used forbearance. For unsubsidized loans, forbearance and deferment cost the same.
Types of Forbearance
If you are having difficulty making payments, you can request a discretionary forbearance verbally. It is up to the lender to grant you the forbearance, but lenders grant these to help prevent your loans from defaulting. Lenders may choose to grant this type of forbearance if you are:
- Having personal problems.
- Unemployed and have exhausted all of your unemployment deferment eligibility.
- Having health problems.
Mandatory forbearance, also known as the excessive debt forbearance, must be granted if your payments on your Title IV federal loans each month are greater than 20% of your total monthly income. You would need to prove this, of course. You can only receive this forbearance for up to 3 years, so use it wisely—or look into income-based repayment.
If you have used all of your medical or dental internship/residency deferment eligibility or your promissory note doesn't provide for this deferment, then you can get a medical or dental internship or residency forbearance.
You can receive a national service, loan forgiveness, Department of Defense repayment, or active military state duty forbearance if you:
- Receive a national service educational award from AmeriCorps.
- Perform service that would qualify you for partial loan repayment under some Department of Defense repayment programs.
- Maintain eligibility for the Teacher Loan Forgiveness program and your lender believes that your forgiven amount will cover your amounts due.
- Serve on active military state duty for at least 30 days.
Perkins Loan Forbearance Rules
Perkins loans have special forbearance rules:
- Forbearance is granted solely at the discretion of your lending school.
- Though not required, the Department of Education encourages schools to grant forbearance for borrowers serving with Americorps.
- Offered for up to one year at a time, but may not exceed a total of three years over the lifetime of the loan.
- Hardship forbearance may be granted if the total amount you pay on your federal student loans is 20% or more of your gross monthly income.
Learn more about student loan repayment options with the SALT® Repayment Navigator.