How does forbearance affect repayment terms?

Forbearance is a temporary relief option for borrowers experiencing financial hardship, allowing them to defer or suspend payments on their loans for a specified period. This means that while in forbearance, the borrower is not required to make regular payments, which can provide crucial breathing room during tough financial times.

During this period, interest may continue to accrue, meaning that the total balance might not decrease and can potentially increase if capitalization occurs when the forbearance period ends. Once forbearance concludes, the borrower typically resumes payments according to the original or revised terms of the loan agreement, but with the pause, they are able to stabilize their financial situation without the immediate burden of making payments.

The other options do not accurately describe forbearance. It does not reduce the total amount owed or eliminate the loan, nor does it inherently require higher monthly payments. Instead, it focuses on temporarily suspending payments to assist borrowers facing temporary difficulties.