While in COVID-19 forbearance, your previous payment schedule is inactivated. Interest continues to accrue but is not added to the principal balance of your loan. A new payment schedule is recalculated after forbearance to pay the remaining term (including any term extensions as a result of forbearance(s)) of your loan with the outstanding interest that accrued. As a result, your monthly payment will likely increase and your first payments following forbearance will be applied first to the unpaid interest.
Please note, if the accrued interest is not paid and you use a different type of forbearance or deferment in the future (one other than the COVID-19 hardship forbearance), the interest could be capitalized at that future time.
The below scenarios can provide you a general idea of how much interest may accrue on your loan over a 90-day vs. 180-day forbearance and how the repayment schedule is impacted thereafter. These scenarios are examples only—they do not reflect your repayment terms
, rate, recalculated payment amount, or amount of accrued interest.
After 90- of COVID-19 forbearance:
- You have a $180,000 loan with a 15-year fixed rate of 5.25%
- Your original monthly payment prior to forbearance is $1,446.98
- You enter forbearance after 12 months into repayment on your loan with an outstanding balance of $171,893
- You exit forbearance with $2,256 in accrued interest
- Your new monthly payment is $1,465.88
To account for the interest that accrued in forbearance, in this example your monthly payment would increase by approximately $19 per month for the remainder of your loan term.
After 180-day of COVID-19 forbearance:
- You exit forbearance with $4,512 in accrued interest – approximately twice as much more interest than with 90-day of forbearance
- Your new monthly payment is $1,484.78
To account for the interest that accrued in forbearance, in this example your monthly payment would increase by approximately $38 per month for the remainder of your loan term.