Forbearance

Lenders are encouraged to grant forbearance to prevent the borrower from defaulting on the repayment obligation. Depending on the reason for the forbearance, the borrower may need to make a written or verbal request; in other circumstances, the lender may be allowed to initiate the process without request from the borrower.

The following provides general information about forbearance.  For specific information, including possible reasons for forbearance, documentation requirements and time limits, please refer to the Common Manual.

Forbearance Types

Four types of forbearance are available. Each type can be granted for specific reasons.

• Discretionary – can be granted for any reason agreed upon between the borrower and the lender (example, financial hardship; going back to school less than half time and no deferment eligibility; unemployed but already received maximum deferement).
• Administrative – can be granted by the lender for specific reasons without written authorization for payments that are overdue or would be due in certain circumstances, such as bankruptcy, identity theft; deliquency before/after deferment.
• Mandatory – must be granted by the lender for specific reasons if the borrower requests, for a specific length of time (example, total monthly educational loan payment is equal to or greater than 20% of the borrower's monthly gross income; internship or residency; national service; loan forgiveness or Department of Defense repayment). This type must be granted in 12 month increments.
• Mandatory Administrative – must be granted by the lender for specific reasons (example, the borrower is not able to repay using an income-sensitive repayment schedule within 10 years due to changes in the variable interest rate; the borrower's death; or other exceptional circumstances).

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