Choosing a Forbearance on Your Student Loan

Using a forbearance on a student loan is a tactic that can present you with some added flexibility. While it is not the ideal choice as it results in costing you money in the long run, it can be beneficial under the right circumstances. Most student loans offer forbearances and if you come across hard times, it can come in handy. Here are the basics of a student loan forbearance and how they work.

What Is a Forbearance?

Student loans are set up like any other type of fixed loan. You have a certain amount of principal that you have to repay as well as interest on the loan. You have a fixed monthly payment and as such, an expected payoff date. If nothing ever goes wrong, you can make the same payment every month for the life of the loan. However, where student loans differ from traditional loans is that they offer forbearances. A forbearance allows you some help if times get tough. If you have an extenuating circumstance that leads to your inability to repay the loan, you can put it off for a period of time.

The lender will have a number of conditions that qualify for an economic forbearance. Divorce, the death of a family member, and losing your job represent just a few of the reasons that may qualify you for a forbearance. A typical forbearance period lasts for a year and allows you to get back on your feet financially during that time before you have to start making payments again.


If you are considering an economic forbearance on your student loans, you will want to keep in mind a few things. One key consideration should be the way that the interest is handled. While you are in forbearance status, the interest does not stop. It still keeps accumulating at the same rate. The only difference is that you are not making any monthly payments. Therefore, the additional money in interest is just added to the loan balance.

When you do this, you will inevitably end up with a larger loan to pay off quite possibly a higher payment to deal with. Therefore, if you are going to do this, you need to think about the long-term consequences instead of just the short-term payment relief.

When to Consider a Forbearance

Taking a forbearance is not something that you should decide on a whim. This is a big financial decision that should require some thought on your part. As it is increasing your debt overall, it can actually affect you negatively in the long run. Before you take a forbearance, make sure that your situation warrants it. First of all, ask the lender if you even qualify for a forbearance under your current condition. If you do qualify, you still need to consider all of the factors. You should make sure that you cannot afford the payments under your current financial condition, but you expect to be able to at a later date.

Need a Student Loan? Click here!
blog comments powered by Disqus