Forbearance (Student Loans)
EducationGlossary term
Definition
A temporary reduction or suspension of student loan payments granted when you are experiencing financial difficulty but do not qualify for deferment. Unlike deferment, interest continues to accrue on all types of federal loans during forbearance, which can significantly increase your total debt. Forbearance should generally be used as a last resort after exploring income-driven repayment plans and deferment options.
Related terms
- DefermentA temporary postponement of student loan payments granted under specific circumstances, such as returning to school, military service, or economic hardship. During deferment, interest does not accrue on subsidized loans, but it does continue to accrue on unsubsidized and PLUS loans. You must apply for deferment through your loan servicer and provide documentation of your qualifying condition.
- Income-Driven Repayment (IDR)A set of federal student loan repayment plans that cap your monthly payment at a percentage of your discretionary income, typically between 10% and 20%. IDR plans extend the repayment period to 20 or 25 years, after which any remaining balance is forgiven. These plans are designed to make loan payments more manageable for borrowers whose debt is high relative to their income.
- Federal Student LoanA loan funded by the federal government to help students pay for college or career school, offering fixed interest rates and flexible repayment options that are generally more favorable than private loans. Federal student loans include Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans, each with different eligibility requirements and terms. Borrowers may also qualify for income-driven repayment plans and loan forgiveness programs.
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