Quick overview

Student loan forbearance gives borrowers a temporary pause or reduction in monthly payments when they face short-term financial challenges. Unlike loan forgiveness or some deferments, forbearance typically allows interest to continue accruing on both federal and private loans. That makes forbearance a useful emergency tool but often a costly one if used long term.

This article explains how forbearance works, who qualifies, typical costs, and safer alternatives to consider. I’ve worked with clients in personal finance for 15 years and regularly recommend forbearance only as a short-term bridge after exploring less expensive options.

Background and recent history

Forbearance has long existed as a borrower relief option. It became widely used during the Great Recession and again during the COVID-19 emergency. The COVID-19 payment pause (the federal emergency relief period) temporarily halted payments and interest accrual on many federal loans through 2023; that program was distinct from routine forbearance and has ended for most borrowers (U.S. Dept. of Education). Today, regular forbearance policies apply as described by federal guidance and private servicer contracts (U.S. Dept. of Education, StudentAid: https://studentaid.gov/).

How forbearance actually works

There are two broad categories for federal loans:

  • Mandatory forbearance: A servicer must grant it when you meet specific statutory criteria.
  • Discretionary forbearance: The servicer may grant it if you demonstrate financial hardship.

Private lenders may offer similar options, but terms vary by contract and lender. In every type of forbearance, payments are reduced or paused for an approved period, usually measured in months. Interest typically continues to accrue on the outstanding balance during that time. After forbearance ends you generally must either resume payments on the same repayment plan or have the accrued interest capitalized (added to your principal), increasing future payments.

Authoritative sources: U.S. Department of Education (StudentAid) and Consumer Financial Protection Bureau (CFPB) provide official guidance and examples (https://studentaid.gov/; https://www.consumerfinance.gov/).

Example: simple math showing the cost

Say you have a $30,000 federal loan at 5% interest. Annual interest = $30,000 * 0.05 = $1,500, or about $125 per month.

  • Six months in forbearance: accrued interest ≈ $125 * 6 = $750.
  • If the accrued interest is capitalized, new principal = $30,750. Future monthly interest and payments will be slightly higher.

That example shows how even a short pause raises your total balance. Longer or repeated forbearances magnify the effect.

Who is eligible and how private vs federal differs

  • Federal loans: Borrowers can apply for discretionary or mandatory forbearance through their servicer. Common reasons include medical hardship, temporary unemployment, or other documented financial difficulties. Programs and allowable durations are defined by federal regulation; servicers must follow those rules (StudentAid).
  • Private loans: Terms vary widely. Some private lenders offer hardship programs similar to forbearance; others require refinancing or loan modification. Always request the exact written terms before accepting.

Practical note from my practice: borrowers with federal loans usually get clearer, standardized protections; private-loan borrowers should request written confirmation of whether interest will be charged, whether the loan will be reported as in forbearance to credit bureaus, and whether the loan will enter a default status if payments are missed.

Types and typical time limits

For federal loans, discretionary forbearance is usually granted in blocks (commonly up to 12 months at a time). A borrower may apply multiple times, but the total time in forbearance can be limited depending on circumstances and program rules. Private lenders set their own limits.

How forbearance affects repayment plans and forgiveness

Forbearance generally does not count toward time-based forgiveness under most income-driven repayment (IDR) plans, Public Service Loan Forgiveness (PSLF), or other forgiveness timelines. That means months spent in forbearance often don’t reduce the number of qualifying payments you need for forgiveness programs. This interaction can be complex—see the FinHelp guide on income-driven repayment and the article specifically about how forbearance affects IDR eligibility for more detail:

In practice, I’ve helped clients avoid losing credit toward forgiveness by switching temporarily to an IDR plan rather than entering forbearance.

Alternatives to forbearance

Before choosing forbearance, consider these options:

  • Income-driven repayment (IDR) plans: These lower monthly payments based on income and family size and preserve qualifying payments for forgiveness—see our income-driven repayment collection for comparisons (https://finhelp.io/glossary/income-driven-repayment-plans-how-they-affect-your-long-term-debt/).
  • Refinancing (private loans): Can lower your interest rate but may eliminate federal protections like IDR or PSLF eligibility.
  • Deferment: Certain deferments (e.g., in-school, some unemployment deferments) can be subsidized so interest does not accrue on subsidized federal loans.
  • Loan consolidation: May simplify payments and move multiple loans onto a plan that qualifies for forgiveness or lower monthly payments.

Steps to request forbearance (practical checklist)

  1. Contact your loan servicer as soon as you anticipate trouble. Get the servicer’s name and a case number.
  2. Ask which forbearance options apply (mandatory vs discretionary) and whether documentation is required.
  3. Confirm whether interest will continue to accrue and whether interest will be capitalized after forbearance ends.
  4. Get written confirmation of the approval terms, including start/end dates and effects on credit reporting and forgiveness.
  5. Track end dates and set reminders to resume payments or re-evaluate your plan.

In my work, missing the written confirmation step often leads to surprises—especially on capitalization rules.

Common mistakes and misconceptions

  • Mistake: Assuming forbearance erases interest. Reality: Most forbearance accrues interest on all loans.
  • Mistake: Believing forbearance counts toward forgiveness. Reality: It usually does not count toward IDR or PSLF qualifying payments.
  • Mistake: Not asking whether interest will capitalize. Capitalization can raise monthly payments and extend repayment.

When forbearance is appropriate

Forbearance can be the right choice when you need an immediate, short break to avoid default—after a job loss, during a temporary medical crisis, or while you wait for a new income source. I often recommend using forbearance for 3–6 months at most, paired with a documented plan to return to income-based repayment or rehabilitation.

FAQs (concise answers)

Q: Can I apply for forbearance multiple times?
A: Yes; federal programs allow repeated forbearance requests, but limits and total time vary. Private lenders set their own rules.

Q: Will forbearance hurt my credit score?
A: If the servicer places the loan in forbearance properly and you follow the agreement, it should not be treated as delinquent. Always get written confirmation.

Q: What happens to interest during forbearance?
A: Interest typically continues to accrue and may be capitalized when forbearance ends unless your agreement specifies otherwise (U.S. Dept. of Education).

Practical takeaway and strategy

Treat forbearance as a short-term emergency tool, not a repayment strategy. First explore income-driven plans or deferments that avoid interest accrual on subsidized loans (if you qualify). If you use forbearance, get explicit written terms, track dates, and plan to refinance, consolidate, or enroll in IDR soon after.

Sources and further reading

Professional disclaimer: This content is educational and reflects general guidance as of 2025. It is not personalized financial or legal advice. For decisions about your loans, consult your loan servicer or a qualified financial advisor.

Author note: In my 15 years advising borrowers, I’ve found that a short, documented forbearance can prevent default—provided borrowers follow up by choosing a longer-term repayment plan that limits interest growth.