Student loan borrowers often encounter financial hurdles that make keeping up with monthly payments challenging. During these times, borrowers may find student loan forbearance is a financial safety net, as it allows individuals to pause their student loan payments under certain circumstances.

While offering immediate relief, forbearance comes with its complexities and implications, particularly concerning interest accrual and the impact on the overall loan balance. It’s a tool that can be applied to both federal student loans and private student loans, including specialized loans like Sallie Mae student loans, Parent PLUS loans, and Direct loans.

Each loan type adheres to its specific forbearance criteria, application processes, and terms, making it essential for borrowers to navigate these waters with a comprehensive understanding of how forbearance works, its benefits, and its potential drawbacks.

What is Forbearance?

Forbearance is a temporary suspension of student loan payments granted under certain circumstances to borrowers facing financial difficulties. It’s important to note that while payments are paused, interest continues to accrue on federal and private student loans during the forbearance period. This means that the total amount owed can increase, affecting the overall repayment cost.

Types of forbearance:

• General (Discretionary) Forbearance: This type of forbearance is granted at the lender’s discretion and can be requested for reasons such as financial hardship, medical expenses, or employment changes. Both federal and private lenders offer general forbearance options, though terms may vary.
• Mandatory Forbearance: Federal student loan servicers are required to grant mandatory forbearance under specific conditions, such as participation in a medical or dental internship/residency, qualifying teaching service, or if the total amount owed each month across all student loans is 20% or more of the borrower’s total monthly gross income.

How to Qualify for Forbearance

• Federal student loans: Qualification criteria for forbearance on federal student loans include financial hardship, unemployment, participation in certain programs, or serving in a national service position that qualifies for a national service award. The specific requirements can vary based on whether the forbearance is discretionary or mandatory.
• Private student loans: For Sallie Mae and other private student loans, qualification for forbearance depends on the lender’s policies. Many private lenders offer forbearance for economic hardship, but the terms, duration, and eligibility criteria can differ significantly from federal loans. Borrowers should contact their lenders directly to understand their options.

Applying for Forbearance

• Federal student loans: To apply for forbearance, borrowers should contact their loan servicer directly. You may need to complete a request form and provide documentation that supports your reason for requesting forbearance, such as proof of income, medical bills, or evidence of unemployment.
• Private student loans: The application process for forbearance on private student loans varies by lender. Borrowers should contact their lender to inquire about the application process, which typically involves submitting a request and documentation of financial hardship or other qualifying circumstances.

Considerations Before Choosing Forbearance

While forbearance can provide temporary relief in times of need, it’s essential to consider the long-term implications. The accrual of interest during forbearance can significantly increase the total repayment amount. Exploring alternative options, such as income-driven repayment plans for federal student loans or refinancing for lower interest rates, may be more beneficial for some borrowers.

Additionally, borrowers with federal student loans should investigate deferment options, which can pause payments but may not accrue interest on subsidized loans or Perkins Loans during the deferment period.