A forbearance is when your lender reduces the amount of your payments or allows you to stop making payments for a short time. Forbearance is different from deferment because the interest will continue to add up while your payments are delayed or reduced.
Forbearance is not automatic. You have to apply for it.
If you have a federally subsidized loan, and your monthly student loan payments add up to 20% or more of your income, your lender must give you a year-long forbearance. If you keep having financial hardship, and provide proof to your lender, this forbearance can be extended to 3 years.
It is important to keep the following in mind about forbearance:
- Interest accrues during the period of forbearance, but it may be easier to get a loan into forbearance;
- Forbearance is usually up to the lender, but is required when the debt exceeds 20% of income;
- Forbearance is not available if a loan has been taken over by a guaranty agency or the Department of Education; and
- Forbearance may also be used to avoid default (9 months of not making payments) and should still be available if your loan is in default.
Updated: June 2017