Forbearance pauses your payments but adds interest, and the cost depends on your loan type

Forbearance lets you stop making student loan payments for a set period — usually three to six months, sometimes longer. During forbearance, you do not have to pay. But interest keeps accruing on most loan types, which means you owe more money when forbearance ends than you did when it started. Whether forbearance is "bad" depends on what happens to that interest and what your other options are.

Federal loans and private loans handle forbearance differently. On federal loans, interest accrues but does not capitalize (get added to your balance) unless you have unsubsidized loans or PLUS loans — those types do capitalize during forbearance. On private loans, the lender decides the rules, and many do capitalize interest immediately. The result: you can end forbearance owing hundreds or thousands more than when you started.

Key Takeaways

  • Interest accrues during forbearance on nearly all loan types, meaning your balance grows even though you are not paying.
  • On federal unsubsidized and PLUS loans, accrued interest gets added to your principal balance when forbearance ends, permanently raising what you owe.
  • Forbearance does not hurt your credit score, but deferment may be a better option if you have subsidized federal loans, because interest does not accrue on those.
  • Forbearance is useful when you face a temporary hardship — job loss, medical emergency, reduced income — but it costs money and delays repayment.
  • If you can afford even small payments during forbearance, making them stops interest from growing and shortens your repayment timeline.

How interest accrual works during forbearance

When you enter forbearance, your servicer stops collecting payments. Interest, however, continues to accrue — that is, to accumulate daily based on your loan balance and interest rate. On a $30,000 loan at 5% interest, you accrue roughly $4.11 per day. Over six months of forbearance, that is about $738 in new interest.

What happens to that accrued interest depends on your loan type. On federal subsidized loans, interest does not accrue at all during forbearance — the government covers it. On federal unsubsidized and PLUS loans, interest accrues and then capitalizes when forbearance ends, meaning it gets added to your principal. On private loans, the note you signed determines the rule, but most capitalize interest during forbearance.

Capitalization matters because it raises your balance permanently. If $738 in interest capitalizes, your new balance is $30,738. You then pay interest on that $738 for the rest of the loan. Over a 10-year repayment, that single forbearance period can cost you an extra $100 or more in total interest.

Forbearance versus deferment: which costs less

Deferment is similar to forbearance — you stop paying — but interest does not accrue on federal subsidized loans during deferment. On unsubsidized and PLUS loans, interest accrues in both forbearance and deferment, so there is no difference in cost. The real savings come if you have subsidized loans and can use deferment instead.

Deferment is harder to get. You must meet specific criteria: you must be in school at least half-time, unemployed and registered with your state's unemployment office, experiencing economic hardship (defined narrowly by the Department of Education), or serving in the military. Forbearance has looser rules — your servicer can grant it for almost any hardship, and you can request it yourself.

If you have subsidized federal loans and may have access to for deferment, deferment costs you nothing in accrued interest. If you have unsubsidized or PLUS loans, forbearance and deferment cost the same. If you have private loans, check your promissory note or call your servicer to learn the rules for both options.

When forbearance makes sense

Forbearance is a reasonable choice when you face a genuine, temporary hardship and have no other way to cover your payments. Job loss, medical emergency, divorce, or a sudden drop in income are common reasons. If you know the hardship will last three to six months and your income will recover, forbearance lets you avoid default while you stabilize.

Forbearance also makes sense if your only alternative is to stop paying without notifying your servicer. Missing payments damages your credit score and can lead to default, wage garnishment, and loss of federal loan benefits. Forbearance protects your credit and keeps you in good standing with your lender.

Forbearance does not make sense if you can afford to pay, even partially. Paying $50 or $100 per month during forbearance stops interest from accruing on that portion and shortens your repayment timeline. It also costs you less in the long run than entering forbearance and letting interest capitalize.

The credit score impact of forbearance

Forbearance does not appear on your credit report as a negative mark. Your account will show as "in forbearance" or "deferred," but this does not lower your credit score the way a missed payment does. Lenders can see that you requested forbearance rather than defaulting, which is viewed as responsible action.

However, forbearance can indirectly affect your credit if it changes how lenders view your ability to repay. If you apply for a mortgage or car loan while in forbearance, the lender may see that you are not currently paying your student loans and factor that into their decision. The forbearance itself does not hurt you, but the context might.

What happens when forbearance ends

When your forbearance period ends, your servicer will contact you with your new payment amount and due date. If interest capitalized during forbearance, your balance will be higher, which may raise your monthly payment. Your servicer should explain the new balance and payment before the first payment is due.

You have options when forbearance ends. You can resume regular payments on your original repayment plan. You can request another forbearance period if you still face hardship, though servicers limit how many times you can do this. You can also switch to a different repayment plan — for federal loans, income-driven plans may lower your payment if your income is still reduced.

If you cannot afford the payment when forbearance ends, contact your servicer before the due date. Do not wait until you miss a payment. Servicers can discuss income-driven repayment, another forbearance period, or other options depending on your situation and loan type.

Strategies to minimize the cost of forbearance

If you must enter forbearance, paying any amount during the forbearance period reduces what interest accrues. If your forbearance is six months and you can pay $50 per month, you stop $300 in interest from accruing. That $300 is $300 you do not have to repay later.

Another strategy is to request the shortest forbearance period available. If your servicer offers three, six, or twelve months, choose three if you think you can resume payments by then. Shorter forbearance means less time for interest to accrue.

For federal loans, you can also ask your servicer about income-driven repayment plans as an alternative to forbearance. These plans cap your payment at a percentage of your discretionary income — sometimes as low as $0 per month if your income is very low. You still accrue interest, but you are not pausing your repayment, and you maintain progress toward Public Service Loan Forgiveness if you are pursuing that.

Frequently Asked Questions

Does forbearance hurt my credit score?

No. Forbearance does not appear as a negative mark on your credit report. Your account shows as "in forbearance," which is different from a missed or late payment. However, if you apply for other credit while in forbearance, lenders may see that you are not currently paying your student loans and factor that into their lending decision.

Can I get out of forbearance early?

Yes. You can resume payments at any time during forbearance, even if the full period has not ended. Contact your servicer to ask how to restart payments. Ending forbearance early stops interest from accruing for the remaining months and gets you back on track faster.

What is the difference between forbearance and income-driven repayment?

Forbearance pauses payments entirely; income-driven repayment lowers your payment based on your income, which may be $0 but keeps you in active repayment. Both accrue interest on unsubsidized loans, but income-driven plans count toward Public Service Loan Forgiveness and do not have time limits like forbearance does.

Will forbearance affect my ability to get a mortgage?

Forbearance itself does not disqualify you, but lenders will see that you are not currently paying your student loans. If you are in forbearance when you apply for a mortgage, the lender may require proof that forbearance is temporary or may factor the paused payments into your debt-to-income ratio, potentially lowering how much they will lend you.

What happens to my interest if I have a subsidized loan in forbearance?

Interest does not accrue on federal subsidized loans during forbearance. The government covers the interest, so your balance stays the same when forbearance ends. This is one reason subsidized loans are valuable — forbearance costs you nothing if you have them.