Forbearance

What It Means

Forbearance is permission from a lender or loan servicer to stop making payments, or to pay less, for a limited time. On federal student loansFederal student loanA student loan made by the U.S. Department of Education, with a fixed rate set by law and federal repayment plans and protections. See more, studentaid.gov says interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more is charged during forbearance on every loan, subsidized ones included, and that interest is still owed when the pause ends. MortgageMortgageA loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term. See more servicers use the same word for their own payment pauses, with terms set by the loan and the servicer.

How People Say It

• "I'm putting my loans in forbearance until I find a new job."
• "My servicer offered forbearance, but the interest kept going."
• "We asked the mortgage company for forbearance after the layoff."

The Breakdown

An example family. Luis owes $30,000 on federal student loans at an example 6.5%. His hours are cut, and he asks his servicer for a 12-month forbearance. He pays nothing for a year, and about $1,950 in interest builds up over that time ($30,000 × 6.5%). When payments restart, he owes that interest on top of the balance he started with.

Where it goes wrong. Forbearance can look like the simplest fix, which makes it tempting to take before checkingChecking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit. See more a cheaper option. Luis's income had dropped, so an income-driven plan could have given him a low payment instead. On the new Repayment Assistance Plan, the Department of Education says unpaid interest for the month is waived after an on-time payment, which a forbearance doesn't do.

What to watch for.

• How many months you're asking for, and the date it ends.
• Whether you can pay the interest during the pause so it doesn't pile up for later.
• For Direct Loans paid out on or after July 1, 2027, a limit of 9 months of general forbearance in any 24-month period, under the Department of Education's final rule.
• Keep making payments until the servicer confirms the forbearance in writing.

Good to Know

Studentaid.gov separates forbearance from defermentDefermentA formal pause on federal student loan payments for a qualifying reason, during which subsidized loans don't build interest. See more by interest: during deferment you aren't charged interest on subsidized loans, and during forbearance interest is charged on all of them. That makes forbearance the more expensive pause for most borrowers, useful for a short, known gap. Private student loansPrivate student loanA student loan from a bank or other private lender, priced by your credit and governed by its contract rather than federal student loan rules. See more and mortgages follow their own contracts and servicer programs, so ask the servicer in writing how interest and the missed payments will be handled before you agree.

Related Terms and Categories

• Deferment

  A formal pause on federal student loan payments for a qualifying reason, during which subsidized loans don't build interest.

• Income-driven repayment

  A federal student loan repayment plan that sets your monthly payment from your income and family size instead of from your balance.

• Federal student loan

  A student loan made by the U.S. Department of Education, with a fixed rate set by law and federal repayment plans and protections.

• Loan default

  Failing to repay a loan as the contract requires, usually after missed payments, which lets the lender use stronger ways to collect.

• Mortgage

  A loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term.

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