Forbearance vs. Deferment for Student Loans

If you can’t make your student loan payments, you have options. Two of the most common ones are deferment and forbearance. According to Federal Student Aid’s 2024 Q1 Portfolio, 3.55 million federal loan borrowers are in deferment, and 1.89 million are in forbearance. 

Deciding between forbearance and deferment for student loans depends on several factors. With forbearance, your loans will accrue interest, but with deferment, depending on the type you have, you might not accrue interest. We’ll explain the differences between deferment and forbearance and which is the best option for specific situations.

What’s the difference between forbearance vs. deferment for student loans?

The main difference between deferment and forbearance is that with forbearance, interest accrues on all types of loans. With deferment, interest accrues on some types of loans but not others. 

If you have financial difficulties, you can apply for forbearance or deferment. Lenders have different eligibility requirements, so check with your lender or student loan servicer to see whether you meet its criteria.

	Forbearance	Deferment
Eligibility	Varies	Must meet specific requirements
Interest	Accrues on all loans	Does not accrue on Direct Subsidized Loans
Length	Up to 12 months	Varies
Hurts your credit score?	No*	No*

How does student loan deferment work?

Student loan deferment allows you to pause your student loan payments for a specific period. If you have Direct Subsidized Loans, your loans will not accrue interest during deferment. Deferment doesn’t hurt your credit but is noted on your credit report. 

To apply, contact your student loan servicer and submit documentation showing you’re eligible for deferment. This might include military service records or medical records. Once you’ve submitted the documentation and filled out any other necessary forms, continue making your student loan payments until your lender approves you for deferment.

Calculate your new payment

Use our calculator to see how much your loan payment would be before and after deferment. If your loan accrues interest during deferment, your total balance can increase. It’s smart to see your ending balance to help you decide whether deferment is right for you.

For example, if you have a $20,000 student loan with a 10-year term and 7.05% interest rate, here’s how deferment can change your monthly payment and loan balance: 

Description	Before deferment	After deferment
Loan amount	$20,000	$21,410 ⬆️
Interest rate	7.05%	7.05%
Loan term	10 years	10 years
Monthly payment	$233	$249 ⬆️

Your total balance might increase by more than $1,400, and you could pay an additional $16 per month.  

How does student loan forbearance work?

Forbearance is an option for borrowers who experience financial hardship. If you can’t make your student loan payments, call your provider and ask to apply for forbearance. Some lenders might ask for documentation proving your financial hardship, and your loans still accrue interest during forbearance. 

Calculate your new payment

Before applying for forbearance, use our calculator to determine how much your loan balance will grow. 

To give an example, here’s what your balance and payment might look like if you defer a $56,000 student loan with an 8% interest rate and a 10-year term:

Description	Before	After
Loan amount	$56,000	$57,000+ ⬆️
Interest rate	8%	8%
Loan term	10 years	10 years
Monthly payment	$679	$693 ⬆️

You might pay more than $1,000 in total for the deferment and an additional $14 per month when you resume payments.

How do forbearance and deferment differ for private vs. federal student loans?

You can apply for forbearance and deferment with private loans and federal student loans. Federal student loans list specific criteria you must meet to qualify. If you qualify for deferment on Direct Subsidized Loans, your interest won’t accrue. Interest accrues with all other types of loans, whether in deferment or forbearance.

The Consumer Financial Protection Bureau states that forbearance and deferment policies might vary depending on which private lender you have. Some offer longer deferment periods than federal student loans; others might not offer deferment at all. 

Before applying for private student loans, familiarize yourself with your lender’s policies on forbearance and deferment in case you need to apply.

Forbearance vs. deferment for your student loans: Which is the best?

Choosing between forbearance and deferment depends on your personal situation and how long you need to pause your payments. Before applying for deferment or forbearance, ask yourself a few questions.

• What type of loans do I have? If I have federal loans, are the loans Direct Subsidized Loans or Direct Unsubsidized Loans?
• How long do I need to pause my student loan payments?
• If I’m experiencing financial hardships, is it a short-term problem or a long-term one?
• Can I handle my student loan balance increasing if my lender pauses my payments?

Below are examples of common scenarios and which choice would be a better option.

Consider deferment if…	Consider forbearance if…
You are actively serving in the military.	You’ve been laid off from your job.
You’re experiencing economic hardship.	You are having significant financial trouble.
You are enrolled in college or a graduate program.	You’ve been affected by an unplanned emergency or natural disaster.
You’re going through cancer treatments.	You have a severe illness.

Our expert’s advice

Erin Kinkade

CFP®

Remember: With forbearance or deferment, the debt is not going away, but the payments are being paused until you are in a better financial condition. You should use these options if you meet the eligibility criteria; either way, it’s a benefit put in place because we might all experience bumps in the road. Experiencing a hardship or life experience that leads a borrower to need to elect one of these options is a part of their overall financial plan—a pathway to achieving life and financial goals. Once you’re in a better financial condition, begin with a repayment plan of making the minimum payments, and try to make additional payments when experiencing excess cash-flow months or years. Don’t feel bad or discouraged if you need to use one of these options. Do what’s in your control, keep in communication with your lender, and make an action plan for when payments will begin again. Also, remember that employers have the option to match (contribute) the amount a borrower pays toward their student loan to their employer retirement plan. Be sure to add this to your research if you are beginning a job search.

Should you consider income-driven repayment?

Before considering deferment or forbearance, first see whether you can convert your loan to an income-driven repayment plan (IDR). IDRs are student loan payment plans that base your payment on your monthly income.

In some cases, your payment can be $0 per month, and the government will forgive your remaining balance by the end of your repayment period, usually 20 or 25 years. However, you might owe income taxes on your forgiven amount.

Pros and cons of income-driven repayment

Pros

• Payments are based on your income.

• Certain types of loans qualify for an interest subsidy.

• No impact on your credit score.

Cons

• IDR plans can lengthen your loan term.

• You must recertify your income each year, which involves paperwork.

• The many types of IDR plans can complicate the process.

Can you get forbearance or deferment on student loans if your loans are in default?

If you don’t make your student loan payment for 270 days, your loan servicer can put your loans into default. Your servicer will report you to the credit bureaus, and it’s possible the government will garnish your wages.

Defaulting on a loan has many repercussions, including the inability to qualify for deferment or forbearance.

Options after a loan default

• Enroll in the Fresh Start program: The Fresh Start program is a temporary program that helps federal student loan borrowers in default. It offers collection relief and stops wage garnishment. Check to see whether your loans are eligible. The program ends on September 30, 2024.
• Debt settlement: Call your lender or collection agency and offer to pay the full amount you owe. Sometimes, you can even negotiate to pay less than that amount. 
• Loan consolidation: You can consolidate your federal loans even if you’re in default. A Direct Consolidation Loan rolls your debt into a new loan. You can make payments on your new loan if you’re able or place your loans into deferment or forbearance.

Millions of borrowers use deferment and forbearance

Realizing you can’t pay your student loans is stressful. Calling your student loan provider to ask about your options might feel embarrassing, but being proactive is important.

Millions of federal student loan borrowers are in default or forbearance. Student loan servicers get calls every day about financial hardships. Putting your student loans in deferment or forbearance can help you get on your feet and increase your cash flow for a period of time.

Importance of early communication

It’s far better to communicate early rather than risk defaulting on your student loans. Federal and most private lenders have options for borrowers who face financial hardships. Make the call and get relief if you need it. Deferment and forbearance aren’t permanent solutions but can be helpful to get you back on your feet.