{"id":24412,"date":"2026-04-25T08:27:31","date_gmt":"2026-04-25T08:27:31","guid":{"rendered":"https:\/\/incredipros.com\/?p=24412"},"modified":"2026-04-25T08:27:32","modified_gmt":"2026-04-25T08:27:32","slug":"what-is-student-loan-forbearance","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=24412","title":{"rendered":"What Is Student Loan Forbearance?"},"content":{"rendered":"
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If you\u2019re covered in student loan debt, then you know how hard it is. It\u2019s like a dark rain cloud following you around, casting a shadow on all the good things in your life. When that rain cloud sticks around long enough, it\u2019s easy to feel hopeless, even desperate. And that can lead to making some pretty poor decisions about your money.\n <\/p>\n

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Pay off debt fast and save more money with Financial Peace University<\/em>.<\/p>\n<\/p><\/div>\n

You might even start looking for a quick \u201cget out of jail free\u201d card\u2014like student loan forbearance.\n <\/p>\n

When you choose student loan forbearance, you\u2019re agreeing to postpone or reduce your student loans\u00a0temporarily<\/em>. But\u2014and this is a big\u00a0but<\/em>\u2014the interest on your loans continues to accrue, aka build up. That accrued interest gets added to your balance. (This type of interest is called capitalized interest.) So, when you \u201cunpause\u201d your loans and start paying on them again, your balance is even larger than when you left it. Yikes.\n <\/p>\n

Look, it can feel like desperate times call for desperate measures. But student loan forbearance is something you want to avoid if you can. It isn\u2019t the magic wand it might appear to be, so let\u2019s take a closer look at what it actually is.\n <\/p>\n

COVID-19 and Student Loans<\/h2>\n

The pandemic definitely threw some serious wrenches in just about everyone\u2019s financial plans. And since people were too busy trying to cover the necessities to worry about their student loans, the federal government passed the\u00a0Coronavirus Aid, Relief, and Economic Security (CARES) Act to offer some relief. Here\u2019s what the CARES Act did for student loan borrowers:\n <\/p>\n

1. Federal student loans are on pause until January 1, 2023.<\/h3>\n

As part of the CARES Act, the federal government issued an \u201cadministrative forbearance\u201d on federal student loans, which is just a fancy way of saying your federal\u00a0student loan payments have been on hold since March 2020. Student loan relief has been extended several times, but it\u2019s finally going to end on December 31, 2022\u2014which means you need to be ready to start making payments again in the new year. Or better yet, if you\u2019re in a position to start making payments now, do it! The sooner you get on top of your loans, the sooner you can get them out of your life.\n <\/p>\n

2. The interest rate is set at 0%.<\/h3>\n

Also through December 31, 2022, the federal government has set the federal student loan interest rate at 0%. This applies to defaulted and non-defaulted Direct Loans, Federal Family Education Loans and Federal Perkins Loans. If you\u2019re not sure what type of loan you have or if your loan is covered, call your loan servicer and ask. But the best part is that any payments you make during the pause will go directly toward your principal. That means this is a great time to save yourself the interest and make progress paying off your student loans!\n <\/p>\n

3. No interest will accrue during the administrative forbearance.<\/h3>\n

Since the interest rate for student loans is currently at 0%, your loans aren\u2019t accruing any interest during the pause. So, come January 1, if you haven\u2019t paid on your student loans, they won\u2019t be any larger than when you left them. (But wouldn\u2019t it be nice if they were smaller <\/em>because you\u2019ve been chipping away at them during the pause?)\n <\/p>\n<\/p><\/div>\n

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How Student Loan Forbearance Works<\/h2>\n

Under normal circumstances (aka when there\u2019s not a global pandemic), student loan forbearance works very differently<\/em>.\n <\/p>\n

First off, if you\u2019re in default on your loans, then student loan forbearance isn\u2019t an option. The type of loan you have determines at what point your loan is considered \u201cin default.\u201d For some lenders, that might mean missing even one payment. For others, it could mean missing payments for 270 days or more. The point is, once you\u2019re in default, the forbearance ship has sailed.\n <\/p>\n

(Now, President Biden did introduce a \u201cFresh Start\u201d initiative to help borrowers in default return to good standing once payments kick back in. This would also allow those borrowers to forbear their loans because they\u2019d no longer be in default. But we don\u2019t have all the details yet about how to take advantage of this fresh start, so you should still prepare to start paying on your student loans in the new year just in case. And keep in mind this is a one-time<\/em> chance to get caught up\u2014not something you can do over and over again if you fall behind on your payments.)\n <\/p>\n

Also, student loan forbearance should never be your go-to relief strategy (you\u2019ll see why in just a minute). Forbearance is a short-term Hail Mary after all your other options have run dry.\n <\/p>\n

When you forbear on a loan, you\u2019re basically hitting the pause button on making payments for up to 12 months. But guess what\u2019s not paused? Yup, interest. That\u2019s right, that puppy keeps on growing even if you\u2019re not making payments.\n <\/p>\n

And the interest is capitalized, which means if you\u2019re not making interest payments during your forbearance, it builds up each month and gets tacked onto your loan\u2019s balance. Uh, this isn\u2019t good. (The only exception to that rule is with Perkins Loans. While interest still accrues on a Perkin\u2019s Loan, your school may not add the unpaid interest to your principal balance.) So, you could easily end up owing more at the end of your forbearance than when you started. Where\u2019s the relief in that?\n <\/p>\n

Let\u2019s look at an example. Nick has a $10,000 federal student loan with a 5% interest rate. He\u2019s granted a forbearance of 12 months. During that time, he doesn\u2019t pay toward the principal or any interest. At the end of the 12 months, he now owes $10,500. And to add insult to injury, he\u2019ll be paying even more in interest and less toward his principal each month when he restarts his payments because his balance is now bigger.\n <\/p>\n

See how this turns into a rotten deal pretty quickly?\n <\/p>\n

Federal vs. Private Student Loan Forbearance<\/h2>\n

Generally speaking, student loan forbearance is available for federal student loans. It\u2019s possible to secure a forbearance for private student loans, but don\u2019t count on it.\n <\/p>\n

Federal student loan forbearance pauses or reduces your payments for a period of up to 12 months. At the end of that time period, if you\u2019re still in a financial hardship, you can reapply for an additional 12 months. You can only do this for a total of three years with\u00a0general<\/em>\u00a0forbearances.\u00a0Mandatory<\/em>\u00a0forbearances can continue indefinitely so long as you continue to meet the eligibility requirements (we\u2019ll talk about this more below).\n <\/p>\n

It probably won\u2019t come as any surprise that private student loan lenders aren\u2019t so flexible. If you\u2019re exploring forbearance, first you\u2019ll need to call your lender and see if it\u2019s even a possibility. In a lot of cases, it won\u2019t be.\n <\/p>\n

Some private lenders may offer forbearance, but it\u2019s usually for only a handful of months at a time. You\u2019re not likely to secure a renewal either. Expect your interest to accrue and to be capitalized.\n <\/p>\n

If you end up applying for federal or private student loan forbearance, you must\u2014we repeat,\u00a0you must<\/em>\u2014continue paying on your loan until you\u2019re approved for forbearance. Applying isn\u2019t a guarantee that it will happen. What is a guarantee is that if you stop paying on your loan, you\u2019ll become delinquent and eventually default. And you know what you can\u2019t do if you default on a student loan? Ding, ding, ding, you guessed it! Forbear.\n <\/p>\n

Types of Student Loan Forbearance<\/h2>\n

There are two types of federal student loan forbearance. They operate a little differently, but the goal is the same for both\u2014to hit pause on your student loans for up to 12 months at a time.\n <\/p>\n

General Forbearance<\/h3>\n

Sometimes called discretionary forbearance<\/em>, general forbearance can be granted or denied. The owner of your loan makes that call. If it\u2019s granted, you can forbear for up to 12 months. After that time, you\u2019ll have to apply again. But keep in mind that you can only do a general forbearance for a total of three years.\n <\/p>\n

If any of the following circumstances are making it difficult for you to make your monthly student loan payments, then you might be eligible for general forbearance:\n <\/p>\n