how to apply for forbearance
borrowers should contact their lenders or loan servicers to apply for a student loan or mortgage forbearance in most cases they must demonstrate a need to put off payments such as financial difficulties associated with a significant illness or job loss 2since forbearance agreements are negotiated lenders have a lot of discretion when it comes to deciding whether or not to offer help and to what extent they do borrowers with a consistent payment history are more likely to be successful for example a borrower who worked at the same company for ten years without ever missing a mortgage payment is a good candidate following a layoff this borrower would be particularly likely to receive forbearance if they are highly skilled and can land a comparable job within a reasonable period a lender is less likely to grant forbearance to a laid off borrower with a spotty employment history or a track record of missed payments another forbearance option is for the lender to temporarily reduce the borrower s interest rate forbearance for student loansstudent loan forbearance was mandated a part of the cares act passed in march 2020 that legislation suspended federal student loan payments set interest rates to 0 stopped collections on defaulted loans and also halted negative reports to credit agencies 1this forbearance relief came to an end in 2023 student loan interest began accruing again in september while the first student loan payments since the covid 19 pandemic were due in october 3forbearance should not be confused with forgiveness though both provide relief to borrowers forbearance is temporary relief while forgiveness is permanent relief for example the biden administration attempted to forgive up to 20 000 in student loan debt per borrower a student loan forgiveness plan that was blocked by the supreme court in june 2023 4in response the white house introduced the saving on a valuable education save plan a new income driven repayment option in which an estimated one million borrowers could qualify for 0 monthly repayments 5 while on the surface this looks like forbearance it is not because the loans are technically in repayment save sets monthly repayments at 5 of discretionary income for undergraduate borrowers it also raises the discretionary income threshold to 225 of the federal poverty line this means a single borrower earning 32 800 per year would have a monthly student loan payment of 0 because they have no discretionary income with which to repay their student loan for a family of four earning less than 67 500 per year would qualify you for a 0 monthly payment 6under save an income driven repayment plan unveiled by the white house an estimated one million student loan borrowers qualify for 0 monthly payments 5although private student loans do not qualify for forbearance under current laws or federal programs some private lenders may offer some form of forbearance on their own forbearance for mortgagesmortgage forbearance assistance was extended to consumers as part of the cares act covid 19 mortgage forbearance applied to all federally backed and federally sponsored mortgages this included loans backed by the following if your loan was backed by hud fha the usda or the va then the deadline for requesting an initial forbearance was extended until the covid 19 national emergency ended which occurred in april 2023 8the homeowner assistance fund established by the american rescue plan act of 2021 provided nearly 10 billion for states and territories to offer relief to struggling homeowners through their housing departments 9 mortgage forbearance periods through the homeowner assistance fund have generally concluded although there may still be lenders offering assistance 10