What Is Student Loan Forbearance?

Student loan forbearance is a temporary pause or reduction in required repayments on student debt. That may sound like a good solution for a cash-poor borrower, but a forbearance often makes full repayment more difficult. Let's discuss why that is, plus other important details to know about this debt strategy.

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Credit Score

A prediction of your borrowing behavior, such as how well you pay off your debt.

The main disadvantage of a forbearance is the interest accrual. The added debt will raise fixed monthly payments and total loan cost, making it harder to repay later. Also, missed payments after the forbearance expires will affect the borrower's credit score. Repeated renewals of the forbearance could lead to loan default.

Two alternatives to forbearance are deferment and income-driven repayment (IDR) plans.

Student loan deferment: Deferments pause loan repayments temporarily. On most loans, interest accrues and is added to the loan balance at the end of deferment. Depending on the loan type, the interest may be capitalized, meaning it will accrue more interest going forward.
IDR plans: IDR plans customize the monthly repayment based on the borrower's discretionary income. Payments can be as low as $0. Any remaining loan balance at the end of the repayment period of up to 25 years is forgiven.

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About the Author

Catherine grew up in Southern California wearing a lot of black and trying to perfect the art of sarcasm. Prior to joining The Fool as a contract writer, Catherine was climbing the corporate ladder in marketing roles and dabbling in too many side hustles. When she's not writing, she can be found riding a horse in the country or shopping online for clothes.

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@catherinejbrock

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