Student loan forbearance can be an essential tool for helping you manage your college loans. It allows you to postpone making payments temporarily and gives you time to organize and figure out a better payment plan. However, you must know how long student loans can be in forbearance—and under what circumstances they can be there for so long.
What is student loan forbearance?
Student loan forbearance is a temporary suspension of your student loans. This can happen if you have an economic hardship or because you are going back to school. You may also be eligible for forbearance if you are unemployed, serving in the military or working full-time at a non-profit organization.
To be eligible for an extending student loan forbearance, you must make all of your payments on time so that they do not default and go into default status. If this happens, then it will be even harder for you to get out from under it later because the interest rate will jump up significantly and make things even more difficult for you financially. Lantern by SoFi comments, “Certain forbearance programs exist for people after they’ve graduated and are struggling with paying down their loans.”
How much can you defer each year?
Unlike forbearance, a deferment is more of a temporary stop rather than an end. The government allows you to defer payments while your loans are in this status.
It’s important to note that you can only defer your loans for up to 12 months in total. However, after that period has passed, and if you’re still in school or working on something else that qualifies for deferment status, your loans will be put back into repayment mode.
The amount of money that is deferred depends on what type of loan(s) you have:
- Subsidized Stafford Loans—up to 100% of the scheduled amount owed
- Unsubsidized Stafford Loans—up to 150% of the scheduled amount owed
Are there eligibility requirements?
- Are there eligibility requirements? Generally, you can be in forbearance if your student loan is in default and you’re enrolled at least half-time. Your school must also be eligible for federal financial aid. If you have a private student loan, you must also have good standing with that lender.
- What are the limitations of forbearance? You will not be able to pay down your principal balance during this time period. Any interest accrued on your loans during forbearance will add up quickly over time—and interest is charged daily!
Now that you know how long a student loan can be in forbearance, what’s next?
If you’re struggling to make payments and are trying to decide if forbearance is the best option for you, there are other options. You could try income-driven repayment plans like Income-Based Repayment (IBR) or Pay As You Earn (PAYE). These will lower your monthly payments based on your income and family size.
If those don’t work for you, consider refinancing with a private lender such as SoFi or Earnest who could refinance your federal student loans at lower interest rates than their original cost.
Next time you get a forbearance letter from your student loan servicer, make sure to read it carefully so that you can understand what it means for your loan.