Deferment vs Forbearance

Updated February 8, 2020

A deferment or forbearance allows you to temporarily stop making your federal student loan payments or to temporarily reduce the amount you pay.

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If you’re experiencing a financial hardship, you may request for a “deferment” or “forbearance” on your federal student loans, as long as the loan isn’t in default.

Both options entitle you to postpone making payments for a set period of time. But before deciding to put your loans into deferment or forbearance, it is essential to understand the difference.

Loan Deferment

Deferment is a temporary suspension of loan payments during which you may not be responsible for paying the interest that accrues on certain types of loans such as federal “subsidized” loans or Perkins loans.

That is, the government pays the interest on your loan during a period of deferment.

Depending on your circumstances, payments are “deferred” in six-month intervals for up to three years. All other federal loans deferred will continue to accrue interest.

If you don’t pay the interest during deferment, it may be capitalized, added to your principal balance, and the amount you pay in the future will be higher.

Loan Forbearance

Forbearance, on the other hand, allows you to suspend or reduce your loan payments for up to 12 months. However, regardless of whether your loan is subsidized or unsubsidized, all loans accrue interest during forbearance.

That is, you are responsible for paying the interest all of the time.

Any unpaid interest will be capitalized, or added to the principal of your loan, essentially increasing your total balance and requiring you to pay more in the long run.

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Deferment
Forbearance
What It IsA deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed.With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months.
Reasons to Apply
  • Enrollment in school, at least halftime
  • Economic hardship
  • Unemployment
  • Military deployment
  • Temporary hardship
  • Economic hardship
  • Unemployment
  • Military deployment
  • Local or national emergency
Eligible Loans
  • Direct Subsidized Loans
  • “Subsidized” portion of Direct Consolidation Loans
  • Direct Unsubsidized Loans
  • PLUS loans
  • “Unsubsidized” portion of Direct Consolidation Loans
Who Pays the Interest

Subsidized federal loans
The government pays the daily interest that accrues during a period of deferment.

All other loans
You are responsible for paying the daily interest that accrues.

All loans
You are responsible for paying the daily interest that accrues during a period of forbearance.

How to Apply Different deferments have different forms. Send the correct one and any necessary documentation to your student loan servicer. There is a single “general forbearance” form, though servicers can also grant forbearance over the phone.
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