Interest charges still accrue during forbearance

Interest charges still accrue during forbearance, adding to your loan balance. On a quarterly basis, lenders can capitalize your interest, causing your balance to increase even more. If at all possible, you should make interest payments during forbearance so the amount you owe doesn’t increase.

To see how quickly unpaid interest can add up, use our Value of making interest payments calculator.

Forbearances come in several forms

Forbearances cover a wide range of financial circumstances. Each one has its own rules and requirements. To avoid confusion, contact your lender. They can determine if you qualify and help you find the best option for your situation. Even if you qualify, you must continue making payments until your lender confirms that the forbearance has been granted.

Here are the primary types of forbearance:

• Discretionary Forbearance
• Mandatory Forbearance
• Administrative Forbearance
• Mandatory Administrative Forbearance

If you suffer a financial setback because of job loss or illness—and are not eligible for a deferment—you may request a discretionary forbearance. Your lender is not required to grant one, and they may ask for proof of your financial circumstances.

If your lender grants you a discretionary forbearance, you can temporarily postpone or reduce your monthly payments. Reduced payments are a better option if you can afford them, because making even small payments can lower your overall student loan debt.

Contact your lender to request a discretionary forbearance.

If you qualify, your lender is required to grant you a Mandatory Forbearance, but you must request it and show proof that you qualify. The following are situations for which a Mandatory Forbearance is granted:

• You are in a medical or dental internship or residency
• You have student loan payments that are 20 percent or more of your monthly income
• You have payments being made for you by the Department of Defense

You can only receive a Mandatory Forbearance if you ask. To get started, contact your lender.

Your lender may grant an Administrative Forbearance for a limited, specific period of time. For example, in June you may learn that you are eligible for deferment starting in September, but you need a forbearance until your deferment begins. In that case, you may apply for Administrative Forbearance. If your lender approves, the Administrative Forbearance would postpone your payments for that brief period until your eligibility for deferment begins—in this example, from June through September.

Contact your lender to request an Administrative Forbearance.

Your lender automatically grants a Mandatory Administrative Forbearance when circumstances dictate. While the qualifying situations vary, most Mandatory Administrative Forbearances are granted for circumstances outside of your control, such as local or national emergencies, natural disasters, and involuntary military service.

Contact your lender to determine if you qualify for a Mandatory Administrative Forbearance.