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What is Administrative Forbearance?

Patrick Austin, J.D. | September 27, 2024

Patrick Austin
Attorney from George Mason
Patrick Austin, JD

Patrick Austin is a licensed attorney with a background in data privacy and information security law. Patrick received his law degree at George Mason University's Antonin Scalia Law School, where he served as the Editor-in-Chief for the National Security Law Journal.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Nobody’s perfect, including student loan servicers. When an administrative issue or oversight occurs with your loan account, it may be placed into an administrative forbearance. This forbearance entails a pause being placed on your student loan payments while the identified administrative difficulties or issues are addressed.

If you took out student loans to pay for college, you may have encountered the term “forbearance” in communications with your student loan servicer. There are different types of forbearance that can be applied to a student loan so if you are wondering, “what administrative forbearance?” here is the answer - a loan can be put into administrative forbearance when there are issues impacting your student loan bill, or bills. Typically, an administrative forbearance will place your loans on an interest-free pause until the issue gets resolved.

Before taking a deep dive in Lake Administrative Forbearance, let’s clarify what makes administrative forbearance different from other types of forbearance and pause periods.

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What is the difference between administrative forbearance vs grace period?

A grace period for a student loan is effectively a period of time in which payments are not required. For example, I took out student loans to pay for law school and for the three years I was in school, I wasn’t obligated to make payments.

During the grace period, interest will accrue on unsubsidized loans while the federal government pays interest on subsidized loans.

When you graduate from school, an automatic 6-month grace period will be applied to your federal Direct Subsidized and Unsubsidized Loans. Direct PLUS Loans, which are available to students attending graduate school and other professional programs, do not have a grace period, though they qualify for a deferment period (more on this topic below).

Other types of student loans may offer a grace period, though the length of the grace period will vary depending on the type of loan. To determine whether there is a grace period associated with your student loan, check the terms of the promissory note. You can also reach out to your lender, or loan servicer.

Generally speaking, only one grace period is applied to a student loan. For example, if a law student takes out loans as an undergraduate student, then took a gap year before starting law school, the undergraduate loans for that borrower will not have another grace period upon graduating from law school.

If you need to postpone repayment on your undergraduate loans following law school, contact your loan servicer to verify if other postponement options are potentially available.

What is the difference between administrative forbearance vs deferment?

In addition to a grace period, there is the option for your student loans to be placed under a deferment period. During a deferment, interest will not accrue on subsidized student loans because the federal government will pay the interest. However, interest will continue to accrue on unsubsidized loans (e.g., Direct Unsubsidized and Direct PLUS Loans).

If, for example, a law student takes out loans as an undergraduate student, their undergraduate loans will likely be placed in an in-school deferment status during their enrollment. There are various types of deferments, including:

  • In-school deferment
  • Graduate fellowship deferment
  • Military deferment
  • Economic hardship
  • Post-enrollment deferments

Deferments are typically granted in 12-month increments. Although monthly payments are not required during a deferment, you have the option to make voluntary payments. Doing so will not jeopardize the borrower’s deferment status.

To secure a deferment, you must apply through your student loan servicer and meet eligibility requirements. If you are deemed ineligible for a deferment, you could consider requesting a forbearance.

Student loan debt stays on your credit report for up to seven years.

There are different types of administrative forbearance

As mentioned earlier, your loan account may wind up in an administrative forbearance in the event administrative issues impact your student loans, for a variety of reasons (more on the various reasons below). The good news is that while your loan account is in forbearance, interest will not accrue on the amount owed and you may not have to make a student loan payment.

MOHELA Administrative Forbearance

If you are wondering “what is administrative forbearance mohela” then you probably have MOHELA as your student loan servicer. The Department of Education recently announced that at least 2.5 million student loan borrowers with MOHELA as their servicer would be put into a mandatory administrative forbearance. Why? Because MOHELA failed to send out billing statements in a timely manner and were found to have sent out bills with inaccurate payment amounts.

As a result, the Department of Education directed MOHELA to put impacted borrowers into an administrative forbearance until these administrative issues were resolved.

Some borrowers with MOHELA as their servicer received an email with the subject line "Administrative Forbearance." If you are not sure whether your account qualifies for the administrative forbearance consider reaching out to MOHELA for clarification.

Public Service Loan Forgiveness Administrative Forbearance

If you work in the public sector, you may be eligible to have a portion, or all, of your student loans forgiven after 10 years (i.e. 120 payments) under the Public Service Loan Forgiveness (PSLF) program. However, crossing the 120-payment threshold for the loan forgiveness program does not mean your loans are automatically wiped away. Rather, you need to file paperwork with your loan servicer requesting student loan forgiveness. During this interim period while your forgiveness status is being reviewed, your account may be placed into an administrative forbearance.

SAVE Administrative Forbearance

The Department of Education placed borrowers repaying their loans under the Saving on a Valuable Education (SAVE) program into an administrative forbearance after the Eighth Circuit Court of Appeals blocked the income-driven student loan repayment plan following SAVE lawsuits filed by a number of states. During the administrative forbearance, payments were not due and the interest rate was set to 0 percent until the legal situation is resolved.

Sweet v. Cardona Administrative Forbearance

If you are part of the Sweet v. Cardona class action lawsuit for defrauded student loan borrowers, the Department of Education will place your account into administrative forbearance and reimburse you for any interest that accrues until you receive your settlement, or until a final decision denying your request for settlement relief.

If you have direct loans, this administrative forbearance should be automatic. If you have commercially held FFELP loans, you may need to inform your loan servicer that you are eligible for the administrative forbearance. If, on the other hand, you are a “post-class” applicant for Sweet v. Cardona, or if you applied for borrower defense after November 16, 2022, then you are only eligible to request general forbearance, not administrative forbearance.

Summary

Here are some key takeaways from this article:

  • In the event administrative issues impact your student loans, your servicer may opt to place your account in an administrative forbearance.
  • During the forbearance period, interest will generally not accrue on the amount owed.
  • In addition to administrative forbearance, borrowers may be eligible for a specific grace period or deferment.

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