Worried You Can't Make Your Student Loan Payments This October? Here's Why Forbearance Isn't as Great an Option as You Think

It’s been a long time since many federal student loan borrowers had to make payments on their debt. During the pandemic, federal student loan payments were paused to give borrowers relief at a time when society was shuttered and the economy was in turmoil.

Meanwhile, many federal student loan borrowers were hoping to have their debt wiped out as part of President Biden’s broad student loan forgiveness plan. But the Supreme Court ruled against that plan, and so now millions of borrowers will have to gear up to start repaying their debt in October after a reprieve that lasted more than three years.

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If you’re worried about your ability to keep up with your student loan payments, then you may be thinking of applying to put your loans into forbearance. Forbearance allows you to hit pause on your loan payments without being considered delinquent.

That’s important, because a delinquency on your credit report could make it difficult to borrow money in the future. Plus, if you simply stop paying your federal student loans altogether, you might eventually risk having some of your wages garnished.

But while forbearance might seem like a great solution to the problem of having to once again make payments on your student loans, there are drawbacks to consider as well.

The problem with forbearance

Let’s get one thing out of the way: Student loan forbearance is something you have to apply for. And to be eligible, you generally need to have proof of a financial difficulty, such as the loss of a job or an injury that’s keeping you out of the workforce.

But let’s assume you’re in a position where you can qualify for forbearance. You may get the option to pause your federal student loan payments for up to 12 months, in many cases. That could buy you some breathing room if you really need it.

But keep in mind that in many cases, interest will continue to accrue on your unpaid loans while your payments are paused. That could leave you with a larger loan balance to repay once your forbearance period comes to an end.

Also, if you’re seeking forbearance because your current monthly loan payments are unaffordable to you, forbearance won’t solve that issue. All it will do is postpone those payments for a period of time. But after, say, a year, you’ll be stuck having to make those same payments, and you may not be in a better position to tackle them.

If you’re seeking forbearance because your monthly payments are too large, a better bet may be to apply for a different repayment plan. Federal borrowers can take advantage of income-driven repayment plans, where monthly payments are calculated as a percentage of income.

Don’t rush into forbearance

It’s easy to see why the idea of student loan forbearance is appealing at a time when you’re looking at a monthly expense you haven’t had to bear in years. But unless you’re truly experiencing a temporary financial hardship, forbearance may not be a good solution. If anything, it could leave you owing more money on your student debt, which is probably the last thing you want.

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