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Student Loan Deferment vs. Forbearance: What’s the Difference?

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In a Nutshell

Student loan forbearance and deferment both provide temporary relief for student loan borrowers who can’t afford their monthly federal student loan payments. When money is tight, you can use deferments and forbearances to temporarily pause student loan repayment until your financial situation improves. The key difference between student loan deferment and forbearance is the way the interest is treated. The federal government pays the interest on subsidized student loans in deferment. In forbearance, the borrower is ultimately responsible for paying the accrued interest.

Written by Attorney Natalie Jean-Baptiste
Updated September 6, 2023


Student loan deferment and forbearance are both ways of getting temporary relief from repaying your federal student loans. Each pauses your monthly payments for a certain amount of time, usually one year. In some cases, you can extend your forbearance for up to 36 months, but you must reapply annually.

Borrowers usually request forbearance or deferment from their student loan servicer and provide evidence to support the request. It’s usually granted for individuals experiencing financial hardship, though we’ll get into specifics later. In less common cases, the government institutes a mandatory forbearance for individual or collective circumstances.

Deferment vs. Forbearance: What’s the Biggest Difference?

The biggest difference between student loan deferment and forbearance is how interest is treated. Even though both options pause your student loan payments, interest continues to accrue while the loan is in forbearance or deferment. 

If you have a federal subsidized student loan, the government pays the interest while the loan is in deferment. But if your loan is in forbearance, you — the borrower — are responsible for paying the accrued interest. 

Some borrowers choose to continue to make monthly interest-only payments when their loans are in forbearance so the interest doesn’t get added to the principal balance of the loan. This is called “capitalized interest.” If you let the interest capitalize, you will pay more over the life of the loan. 

What Loans Qualify for Deferment and Forbearance?

Most federal student loans qualify for deferment or forbearance, including Direct Loans, FFEL Program loans, PLUS loans, Perkins Loans, and others. Both deferment and forbearance are federal programs, so they’re only offered to borrowers with federal student loans (those issued or backed by the U.S. Department of Education).

Many private lenders don’t offer deferment or forbearance for private student loans. If you encounter financial hardship, contact your private lender directly to find out what assistance programs, if any, they offer.

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Are You Eligible for Student Loan Deferment?

It may be more difficult to get approved for deferment than forbearance. That said, there are specific deferment programs based on your circumstances including if you are:

  • Enrolled in school at least half time

  • Experiencing economic hardship

  • Unemployed

  • Enrolled in a graduate fellowship program

  • In treatment (or post-treatment) for cancer

  • Active duty (or post-active duty) military

  • In a rehab program

What Is In-School Deferment?

An in-school deferment pauses your loan payments while you’re enrolled in an eligible college or career school at least half-time. This includes graduate or professional schools, and the deferment continues for six months after you graduate or leave school.

Unlike other types of deferment, in-school deferment is automatic. You don’t need to submit an application. If you’re enrolled at least half-time but don’t automatically receive a deferment, contact your school’s admissions or enrollment office. 

Parent PLUS Borrower Deferment

You may qualify for this deferment if you’re a Parent PLUS borrower, and the student you took the loan out for is enrolled at least half-time at an eligible college or career school. You must request it, however, it’s not automatic like it is for student borrowers. There’s no time limit. 

You can also request an additional six-month post-enrollment deferment after your student drops below half-time, graduates, or withdraws from school.

What Is an Economic Hardship Deferment?

You may be eligible for an economic hardship deferment if any of the following are true:

  • You’re receiving public assistance payments under a federal or state program. 

  • You work full-time but your income is less than 150% of the federal poverty guideline for your household size and state of residence.

  • You are serving as a Peace Corps volunteer.

This type of deferment is available for up to three years, but you must reapply every 12 months.

What Is Unemployment Deferment?

There are two ways to qualify for unemployment deferment:

  1. You’re diligently seeking but unable to find full-time employment in the United States.

  2. You’re eligible to receive unemployment benefits.

Full-time employment is defined as 30 hours/week for at least three consecutive months. If you’ve rejected any offers of full-time employment, even if you were overqualified for the position, you won’t be eligible for the deferment. You must make at least six diligent attempts in the most recent six months to be eligible. You must also register with a public or private employment agency.

What Is a Graduate Fellowship Deferment?

You may qualify for a deferment if you’re enrolled in an approved graduate fellowship program. There are several eligibility criteria for graduate fellowship deferment. You can read the complete list criteria and find the application form on StudentAid.gov.

What Is Cancer Deferment?

You may qualify to defer your student loans if you’re receiving cancer treatment and for the six-month period after your treatment ends. Unlike other deferments, a deferment for borrowers receiving cancer treatment will not have interest accrue on any of your federal loans, including unsubsidized loans.

Please review the U.S. Department of Education’s specific criteria for cancer deferments.

What Is Military Deferment?

You may be eligible to defer your student loans if you are on active duty military service in connection with a war, military operation, or national emergency. There is no limit on how long this deferment lasts or how many times it can be used. The deferment ends 180 days after demobilization. The only documentation required is proof via military orders or a written statement from the commanding officer.

What Is Post-Active Duty Deferment?

This deferment may be available if you were enrolled in school at the time you were called for active duty or service. You may be eligible for this deferment if you’ve completed qualifying active duty service and any applicable grace period. Find the complete list of requirements on the Federal Student Aid website.

What Is Rehabilitation Training Deferment?

You may be eligible for a deferment if you’re enrolled in a course of study that is part of a certified rehabilitation training program for disabled individuals. The program must be certified by a state agency or the Department of Veterans Affairs to provide vocational, drug abuse, mental health, or alcohol abuse rehabilitation treatment.

What Is Forbearance for Student Loans?

Most types of forbearances are not automatic. You must submit a request to your loan servicer. You’ll also have to provide supporting documentation. 

There are two types of student loan forbearances: general and mandatory.

General Forbearance

Your student loan servicer decides whether to grant a general forbearance. This is why general forbearance is also known as discretionary forbearance. 

You can request a general forbearance if:

  • You’ve encountered financial difficulties.

  • You have unexpected medical expenses you need to pay.

  • You’ve had a change in employment that affects your ability to repay your loans.

  • You prove you need it for another reason the loan servicer considers acceptable.

What Is Mandatory Forbearance?

If you’re eligible for a mandatory forbearance, your loan servicer is required to grant you forbearance. You’re eligible for mandatory forbearance if:

  • You're in a medical or dental internship or residency.

  • The total you owe for all your student loans is 20% or more than your monthly gross income.

  • You're serving in AmeriCorps.

  • You’re teaching in a job that makes you eligible for teacher loan forgiveness.

  • You qualify for partial repayment of your loans via the U.S. Department of Defense Student Loans Repayment Program.

  • You’re a member of the National Guard and have been called up by a governor.

How Long Do Mandatory Forbearances Last?

Mandatory forbearances may be granted for no more than 12 months at a time. If you continue to meet the eligibility requirements for the forbearance when your current forbearance period ends, you may request another mandatory forbearance.

What Is Mandatory Administrative Forbearance?

In rare cases, such as a local or national emergency or natural disaster, lenders will grant mandatory administrative forbearance. During a mandatory administrative forbearance, everything stops: No payments are due, no collection calls are made, no wage garnishments are issued. 

Back in 2020, federal student loan borrowers were put in administrative forbearance during the pandemic, when the federal government:

  • Suspended all federal student loan payments

  • Stopped collections on defaulted loans

  • Reduced interest rates to 0% 

This administrative forbearance continued for several years, but is set to end in October of 2023.

When Should You Request Forbearance or Deferment?

Only you can decide the best course of action on your student loans, but if you’re experiencing financial hardship, you may want to consider enrolling in one of the four income-driven repayment (IDR) plans before applying for deferment or forbearance. 

In an IDR plan, your monthly payment is based on your income and family size. If your monthly income is low enough, your payment could be as low as $0 a month. But your loan will still be considered in repayment status, which counts toward the 20- or 25-year repayment term for loan forgiveness

Deferment or forbearance, on the other hand, does not allow you to make progress toward forgiveness. To learn more about how IDR plans may help you, read our Guide to Income-Driven Repayment Plans.



Written By:

Attorney Natalie Jean-Baptiste

LinkedIn

Natalie Jean-Baptiste is a New York bankruptcy attorney focused primarily on providing debt relief to student loan borrowers. To date, she has helped her clients wipe out nearly $1 million of student loan debt through the bankruptcy process and other administrative tools. Prior t... read more about Attorney Natalie Jean-Baptiste

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