Student Loan Forbearance Explained: How It Works

Struggling to keep up with student loan payments? You’re not alone: millions of borrowers turn to student loan forbearance for short-term relief when facing financial or personal challenges.
Student loan forbearance allows you to pause or reduce your student loan payments for a limited period of time. It can be a safety net if you’re in a temporary bind, but it comes with long-term costs many borrowers underestimate. And for many borrowers, it may not be the best option – getting on an income-driven repayment plan may be smarter.
Here’s everything you need to know about how forbearance works today, when it makes sense, and how upcoming changes in 2027 will make it more restrictive for new borrowers.

What Is Student Loan Forbearance?

Student loan forbearance is a temporary pause or reduction in your monthly loan payments, usually granted when you’re experiencing short-term financial hardship, job loss, or medical challenges. Sometimes the forbearance is required by the government – such as the current SAVE forbearance.

While forbearance stops your required payments, interest continues to accrue. Once the forbearance period ends, that interest is often capitalized (added to your loan balance) which means you’ll end up paying interest on that interest later. 

Because of this, forbearance is best viewed as a short-term relief tool, not a long-term repayment strategy.

Federal vs. Private Student Loan Forbearance

Federal student loans offer more standardized and transparent forbearance options than private lenders.

Private lenders are not required to offer forbearance, but some may allow temporary payment pauses or interest-only periods. Always confirm the terms and the impact on interest before agreeing.

Forbearance vs. Deferment

When it comes to federal student loans, forbearance and deferment both pause payments — but the interest rules differ.

For private loans, “deferment” and “forbearance” often mean the same thing — always confirm whether interest will continue to accrue.

Types Of Federal Student Loan Forbearance

There are two types of federal student loan forbearance: general and mandatory.

Depending on your answers, you may decide to pursue forbearance. If you’re starting to think it’s not right for you, don’t despair — there are other options, most notably for federal loans.

Strict Forbearance Rules Coming in 2027 (OBBBA)

Major changes are on the horizon. Starting July 1, 2027, new borrowers will face stricter limits under the One Big Beautiful Bill Act (OBBBA).

New Rule:

Borrowers who receive federal student loans on or after July 1, 2027, can only receive up to 9 months of forbearance during any 24-month period.

What This Means

• Forbearance will still exist but it’s being narrowed to short-term use only.
• The goal is to prevent repeated “forbearance drift,” where borrowers cycle in and out of repayment without reducing their balance.
• Critics argued past policies allowed borrowers to pause payments indefinitely, even enabling “Borrow and Die” strategies where balances were never paid off.

The OBBBA rules encourage borrowers to use income-driven repayment instead of long-term pauses that inflate total loan costs.

Better Alternatives to Forbearance

If you need a more sustainable plan, explore these options:

• Income-Driven Repayment (IDR): Caps payments at 5–15% of your discretionary income, with forgiveness after 20–25 years.
• Extended Repayment Plan: Spreads payments up to 25 years, lowering your monthly amount.
• Refinancing: Can lower your interest rate and simplify multiple loans into one payment (best for borrowers with stable income and good credit).

Frequently Asked Questions

Does student loan forbearance affect your credit score?

Not directly — forbearance itself doesn’t appear as negative information on your credit report. However, if you miss payments before your forbearance is approved, those missed payments can hurt your credit score. Always confirm your forbearance start date with your servicer.

How long can you stay in student loan forbearance?

Federal forbearance typically lasts up to 12 months at a time and can be renewed for a total of three years.

Under the OBBBA rules starting in 2027, new borrowers will be limited to 9 months within any 24-month period.

Does interest accrue during forbearance?

Yes — interest always accrues on both subsidized and unsubsidized loans during forbearance. If you don’t pay it off, that interest is added to your loan balance when forbearance ends (a process called capitalization).

What’s the difference between forbearance and deferment?

The main difference is that in deferment, the government may pay the interest on certain loans (like Direct Subsidized Loans), while in forbearance, you’re responsible for all interest. Deferment is usually tied to school, unemployment, or military service.

Can I qualify for Public Service Loan Forgiveness (PSLF) while in forbearance?

No. First, you’re not making payments in forbearance. If you do make a non-required payment during forbearance, they do not count toward PSLF’s 120 qualifying payments. If you’re pursuing forgiveness, avoid unnecessary forbearance periods.

What should I do if I can’t afford my student loan payments long-term?

If your financial challenge is ongoing, look into income-driven repayment (IDR) plans instead of forbearance. IDR plans base payments on your income and family size, and may lead to loan forgiveness after 20–25 years.

Final Thoughts

Forbearance can be a valuable safety net during tough times but it’s not a cure-all. Because interest continues to accrue, it should be used only when absolutely necessary and for short durations.

If you’re struggling, talk to your loan servicer about all your options, including deferment or income-driven repayment. And if you’re borrowing after 2027, prepare for stricter limits on how long you can pause payments.

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