Student loan borrowers owe an astounding $1.78 trillion in education debt, and the average monthly student loan payment is $337. But no matter what your monthly loan payment looks like, there may come a point when you feel you can no longer keep up with it.
Maybe you've lost your job, or you've gotten a new one with a lower salary. Or maybe you've run into health issues, or a string of other expenses are causing your student loan payments to become much more of a burden than usual.
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If you took out private student loans, you may be stuck having to pay them regardless unless your lender exercises some sympathy and allows you to pause your payments for a period of time. But if you took out federal student loans, you may be eligible for forbearance.
Forbearance is the process of stopping your student loan payments for a period of time. During forbearance, you won't be flagged as delinquent on your loans for not making payments.
Putting your student loans into forbearance might buy you some breathing room at a time when you need it. But here are some things you ought to know if you'll be hitting pause on your federal student loan payments.
1. Interest on your loans will still accrue
When you put your student loans into forbearance, you get out of making payments, but you don't get out of accruing interest on your debt. Now, you're allowed to pay the interest portion of your loan as it accrues during forbearance, but if that's not possible, you can allow that interest to accrue and pay it at the end of your forbearance period. But going the latter route could result in you paying more interest in total over the life of your loans.
2. You may be automatically entitled to forbearance
Depending on the type of federal student loans you have, you may be automatically entitled to forbearance, should you choose to exercise that option. If you're a member of the National Guard and have been activated but aren't eligible for a military deferment, forbearance is something you're generally entitled to. You may also be eligible for automatic forbearance if you're serving in a medical or dental internship or residency program and you meet certain requirements.
3. Changing your repayment plan might be a better option
Forbearance is not an option you can exercise indefinitely. Generally, you're only allowed to put your loans into forbearance for up to 12 months in a row. And while you can request forbearance again, there's a cumulative limit of three years for general forbearance requests.
That's why a better bet may be for you to change your student loan repayment plan rather than seek forbearance. If you can pay some amount of money each month but not the amount you're liable for now, an income-based or extended repayment plan could make it so that you're still paying your loans, but that your payments aren't as much of a burden. And this way, you won't have to worry about that forbearance clock ticking down.
Forbearance can, in many cases, be an option worth pursuing if you have federal student loans. Just make sure you understand what that entails, and first see if other options, like a different repayment plan, make more sense.
