How Does the SAVE Plan Forbearance Impact Your Student Loans?

The SAVE (Saving on a Valuable Education) Plan is an income-driven repayment (IDR) option for federal student loans, designed to make monthly payments more affordable based on income and family size. Borrowers who enter forbearance—pausing payments due to financial hardship or other qualifying circumstances—should understand its impact on their loan balance and repayment strategy. Forbearance can lead to interest accrual, changes in payment calculations, and an extended repayment timeline, making it essential to plan for the transition back into repayment.

Basic Qualifications

Forbearance under the SAVE Plan is available to borrowers facing temporary financial difficulties, such as job loss, medical expenses, or military deployment. It is more flexible than deferment but still requires loan servicer approval.

To apply, borrowers must submit a request outlining their financial situation. Some types of forbearance, such as those related to national emergencies, may be applied automatically, but most require documentation. Loan servicers review requests based on income loss, medical bills, or other financial obligations. If approved, payments are paused for a set period, though the length varies by case.

Payment Adjustments

Forbearance does not count toward the required payments for loan forgiveness. Borrowers working toward forgiveness after 20 or 25 years will see their timeline extended by the months spent in forbearance.

Once forbearance ends, monthly payments may be recalculated based on updated income and family size. If a borrower’s financial situation has changed—such as increased earnings or a shift in household dependents—their new payment could be higher. Those who previously had a $0 payment due to low income may now owe a monthly amount.

Forbearance can also alter the schedule for income recertification. Borrowers due to recertify while in forbearance may need to submit updated financial details immediately after exiting. Failing to do so on time could result in a higher monthly payment.

Consequences on Interest

Interest accrues during forbearance, increasing the total loan cost. While the SAVE Plan prevents unpaid interest from being added to the principal balance, it does not stop interest from accumulating. The government covers unpaid interest when borrowers make payments under SAVE, but this benefit does not apply during forbearance.

For example, a borrower with a $30,000 loan at a 5% interest rate accrues approximately $1,500 in interest per year during forbearance. Since no payments are made, this interest adds to the total amount owed. Extended forbearance periods can make it harder to reduce overall debt once payments resume.

Documentation Requirements

Borrowers must provide documentation proving financial hardship. Loan servicers evaluate requests based on income loss, medical expenses, or other financial strains. Pay stubs, tax returns, and bank statements are commonly required. If citing medical expenses, borrowers may need to submit hospital bills or insurance claims.

For employment disruptions, termination letters, unemployment benefits statements, or proof of reduced work hours can support the request. Those affected by federally declared disasters may need FEMA documentation or insurance claims. Military personnel requesting forbearance due to deployment typically provide active-duty orders or a letter from their commanding officer. Incomplete or outdated records can delay approval.

Transition Out of Forbearance

Exiting forbearance requires planning. Loan servicers notify borrowers before payments resume, but it is the borrower’s responsibility to review their updated loan balance, recalculated payments, and accrued interest.

Borrowers must recertify income and family size if their previous information is outdated. Failing to submit updated income details may result in a higher payment. Setting up automatic payments or selecting a preferred due date can help manage the transition.

If a borrower’s financial situation has not improved enough to resume payments comfortably, they may need to explore alternative repayment options. Switching to a different income-driven plan or requesting a temporary lower payment under SAVE may be necessary. Loan servicers can provide guidance, but borrowers should act before forbearance ends to avoid missed payments or delinquency.