Administrative forbearance for student loans occurs when your payments are paused or reduced by your lender or loan servicer, often due to account management or technical issues. This means you’ll get a break from federal student loan payments and often from interest accrual as well until the forbearance ends.
Keep reading to explore the ins and outs of administrative forbearance, how it can impact your financial future, and ways to manage your student loan debt.
Defining Administrative Forbearance
Administrative forbearance is when your federal student loan payments are temporarily paused or reduced by your lender. This relief can be given due to system glitches, billing errors, or even natural disasters. For example:
• To tackle multiple issues with federal student loan servicing and repayment during the pandemic, the Biden administration opted for administrative forbearance. This paused payments for federal student loan borrowers and dropped their rates to 0% interest on student loans during the forbearance period.
• In late October 2023, the Department of Education (DOE) found that 2.5 million MOHELA borrowers received their billing statements late or with incorrect amounts, causing many to fall behind on their loan payments. To help, the DOE put these borrowers into administrative forbearance and withheld over $7.2 million from MOHELA, giving borrowers a chance to get back on track and keep their loans in good standing.
Administrative forbearance is usually applied automatically, so you don’t need to go through an approval process as with other types of forbearance. However, in some cases, you may need to contact your lender to opt in.
Other Types of Student Loan Forbearance
Administrative forbearance isn’t the only type of relief available. Other types of student loan forbearance include:
• General Forbearance: Also known as discretionary forbearance, this is when your loan servicer decides if you qualify for a break from payments when you can’t afford them. It’s available for Direct Loans, Federal Family Education Loan (FFEL) Program loans, and Perkins Loans, and lasts up to 12 months at a time. If you’re still having trouble after that, you can request another forbearance period.
• Mandatory Forbearance: If you meet certain criteria, your loan servicer has to grant you forbearance on Direct, FFEL, and Perkins Loans. Specifically, this applies if you’re in a medical or dental residency, your loan payments are 20% or more of your income, or you’re completing qualifying teaching or military service. The forbearance lasts up to 12 months at a time and can be extended if you still qualify.
Keep in mind, forbearance is typically offered for federal student loans. If you have private loans (say, from a student loan refinance), your options will depend on your lender.
When Is Administrative Forbearance Granted?
Administrative forbearance is typically granted in situations like these:
• You were given a deferment, but your lender later found out you weren’t eligible.
• There was a period in which payments were overdue before your deferment started.
• There’s a gap between when you should start repaying and when your lender schedules your first payment.
• Your loan is sold or transferred, and you’re less than 60 days behind on payments.
• Your loan servicer needs time to determine if you qualify for a discharge, such as for bankruptcy or school closure.
• There’s a delinquency period left after a deferment or mandatory forbearance before the next payment is due.
• You’ve been affected by a natural disaster.
Advantages and Disadvantages of Administrative Forbearance
Administrative forbearance offers both benefits and drawbacks. Here’s what you need to know.
Benefits of Temporary Relief
• Administrative forbearance, while not under the borrower’s control, can provide unexpected financial relief when it occurs.
• Interest does not usually accrue during the period of administrative forbearance.
• Typically, you will get credit toward income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF) for months that your loan spends in administrative forbearance.
Downsides of Administrative Forbearance
• During administrative forbearance, there is the possibility that your loan servicer might have interest accrue during the forbearance period or part of it. For instance, when the Covid student loan pause ended in August 2023, Nelnet advised borrowers that interest would accrue in the month of September (which was considered a month of administrative forbearance). Payments began to be due again in October. Though rare, this kind of scenario of interest accrual during forbearance could mean you owe more money.
• In certain situations, there is no impact on loan forgiveness programs. That is, time spent in administrative forbearance may not count toward loan forgiveness. This is the case with income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF) during the SAVE plan’s pause (more on that below). In this situation, the time it takes to qualify for forgiveness could be extended.
Recommended: Understanding Capitalized Interest on Student Loans
Applying for Forbearance
When a loan servicer grants administrative forbearance, it’s usually an automatic process. This means that if you’re eligible, your servicer will notify you of the forbearance, and your loan payments will be paused without your needing to do anything.
However, if you want to qualify for general or mandatory forbearance, you’ll usually need to contact your loan servicer and submit a request.
Required Documentation
To apply for general or mandatory forbearance, you’ll need to provide specific documentation. This can include proof of income, employment status, or financial hardship. In some cases, your loan servicer may request additional information.
Notification and Approval Timeline
Once you’ve submitted your request for forbearance, your loan servicer will review your application and notify you of their decision, typically within seven to 10 days. If approved, you’ll receive information on the start date of your forbearance period.
It’s important to continue making payments until you receive a notification of forbearance approval with a start date. Failure to do so may result in loan default, which can impact your credit.
Duration and Renewal Process
Forbearance periods usually last up to 12 months at a time. If you need to pause your payments after the initial forbearance period ends, you can apply to extend forbearance. Make sure to contact your loan servicer before your current forbearance period expires to discuss your options and submit any necessary paperwork for renewal.
Alternatives to Forbearance
If student loan forbearance isn’t an option, there are a few other ways to ease the burden of your student loan debt if you’re facing financial challenges.
Income-Driven Repayment Plans
With an income-driven repayment plan, your student loan payments are tailored to your income and family size. In some cases, you might pay as little as $0 per month. Your monthly payments are usually calculated based on a percentage of your income.
To qualify, you must submit an application. Then every year after approval, you’ll need to update your income and family size, a process known as recertifying your IDR plan. Once your IDR plan term ends, usually after 20 to 25 years, any remaining student loan balance is typically forgiven.
The DOE offers one active plan and one that is paused due to legal review:
• Income-Based Repayment (IBR) Plan: Depending on when you borrowed your loan, this plan requires borrowers to pay between 10% and 15% of their discretionary income, with loan terms usually lasting 20 to 25 years.
• Saving on a Valuable Education (SAVE) Plan (formerly REPAYE Plan): The SAVE plan was designed to set payments at 5% of income for undergraduate-only borrowers and between 5% and 10% for those with any graduate loans. Loan forgiveness was intended to kick in after 20 years for undergraduate loans and 25 years for graduate or professional loans. However, at this time, the plan has been paused while the Supreme Court considers lawsuits regarding the program.
Deferment Options
Lenders automatically defer student loans while you’re enrolled in school and for six months after graduation. You may also request deferral for the reasons below. (A couple of points to keep in mind: Interest will likely accrue during a deferment period, and you may not make progress toward forgiveness while in deferment.)
Here are other types of deferment vs. forbearance you may qualify for:
• Cancer treatment deferment
• Economic hardship deferment
• Graduate fellowship deferment
• Military service and post-active duty student deferment
• Parent PLUS borrower deferment
• Rehabilitation training deferment
• Unemployment deferment
Loan Consolidation or Refinancing
If you’re dealing with multiple federal student loans, you can combine them into a single Federal Direct Consolidation Loan. Just keep in mind, this typically won’t lower your interest rate — the new rate is a weighted average of your current rates, rounded up a bit.
Another option is to consider refinancing student loans, which might include federal and private student loans. This means you take out a new private loan to pay off all your existing student loans, rolling them into one payment.
You can use a student loan refinance calculator to evaluate how this might help you save. You could potentially get a lower interest rate or a longer repayment period, making your payments more manageable. An important heads-up, however: If you choose to refinance your federal loans, you’ll lose access to federal benefits and protections. Also, if you extend your loan term, you may pay more interest over the life of the loan, increasing your overall borrowing costs.
The Takeaway
Administrative forbearance on student loans is an automatic pause that loan servicers place on your payments for various reasons, like if they made a mistake with your billing or a natural disaster has occurred. They might or might not stop interest accrual during this time. If you’re having trouble managing your student debt, you might want to consider student loan deferment, income-driven repayment, or refinancing to better manage your payments.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Does administrative forbearance affect credit scores?
Your credit score usually won’t be affected when your loan is in administrative forbearance as long as you follow the agreement’s terms.
Can administrative forbearance be applied retroactively?
Yes, loan servicers can retroactively apply administrative forbearance to federal student loans. This can help cover past due amounts before you start a new repayment plan. It’s also useful if there are administrative or technical issues, like receiving incorrect or late billing statements, that prevent you from making payments.
What happens after administrative forbearance ends?
Once administrative forbearance ends, your payments will usually resume, and interest will begin to accrue again if it had been paused. It’s important to be prepared for these payments to ensure you stay on track with your loan repayment schedule as stated in your loan agreement.
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