Deferment vs. Forbearance for Student Loans
Student loan deferment and forbearance can both postpone your payments, offering immediate financial relief without jeopardizing your account. Deferment also typically pauses your interest, making it a better choice than forbearance.
However, neither plan is an ideal long-term solution. So besides considering student loan deferment vs. forbearance, you’ll also want to look at alternative options including income-driven repayment plans or student loan refinancing.
What is the difference between forbearance and deferment?
Deferment and forbearance are generally available for federal student loans (though we’ll look at their private loan versions below). Here is a point-by-point comparison…
|Length||Varies by deferment type, but can last from six months to three years or longer||No more than 12 months at a time, with the option to request future forbearances (general forbearances have a cumulative limit of three years)|
|Criteria||Must meet one of the qualifying events, such as attending college or undergoing cancer treatment|| There are two main types: |
|Interest accrual||Interest won’t accrue on subsidized federal Direct loans or Perkins loans, nor the subsidized portion of FFEL or Direct Consolidation loans. Other loans will accrue interest.||Interest accrues and capitalizes on all loans|
|Credit impact||Deferment will not affect your credit||Forbearance will not affect your credit|
Student loan deferment
A deferment allows you to postpone your monthly dues and interest on subsidized federal loans and Perkins loans without any impact to your credit. Additionally, you won’t be responsible for the interest on the subsidized portion of Family Federal Education loans (FFEL) and Direct Consolidation loans during deferment.
However, interest will still accrue for unsubsidized and PLUS loans during the deferment period. Making interest-only payments during deferment can help avoid capitalized interest, which is when unpaid interest is added to your principal’s balance.
Deferment times can vary depending on your unique circumstances, but they often range from six months to three years or more if you qualify.
Applicants must meet at least one of the following criteria to qualify for deferment:
- Enrolled at least half time in an eligible college or career school
- Enrolled in an approved graduate fellowship program
- Disabled and enrolled in an approved rehabilitation training program
- Unemployed or unable to find full-time employment (up to three years)
- Earning less than 150% per month of the state’s poverty designation
- Receiving state or federal financial assistance
- Serving in the Peace Corps (up to three years)
- Current active duty with the military (or within the last 13 months)
- Undergoing cancer treatment (Deferment continues for six months after treatment is completed)
- You’re a parent with a parent PLUS loan and your child is currently enrolled at least half time at a qualifying school
Student loan forbearance
Forbearance may be an option for borrowers who don’t qualify for deferment. While forbearance can freeze your student loan payments for up to 12 months, interest will continue to accrue — regardless of loan type.
There are two types of federal student loan forbearance: general and mandatory.
A general forbearance, often called “discretionary forbearance,” is requested by the student. You can put federal Direct, FFEL and Perkins loans into forbearance.
Lenders may grant a forbearance for up to 12 months, and the student can request another forbearance when the current one ends. However, the cumulative cap for general forbearance is three years.
The Department of Education states that you must satisfy at least one of the following conditions to qualify for forbearance:
- Severe financial difficulties
- Change or loss of employment
- Medical conditions/expenses
- Other circumstances accepted by your loan servicer
Lenders are required to grant a mandatory forbearance for up to 12 months at a time if the applicant meets any of the following:
- Is an activated member of the National Guard who is not qualified for the military deferment
- Qualifies to apply for a teacher loan forgiveness
- Is an active participant in a medical or dental residency or internship
- Serves in an AmeriCorps position
- Has an outstanding loan amount that is 20% or more of their monthly gross income (up to three years)
- Is eligible for the U.S. Department of Defense Student Loan Repayment Programs
Following the 12-month mandatory forbearance, the borrower may request an additional one. There are no limits to how many mandatory forbearances you can have as long as you continue to meet the requirements.
Forbearance vs. deferment with private student loans
Private lenders are not required to offer or grant forbearance or deferment for their student loans. However, they may be willing to work with distressed borrowers who communicate their hardships.
Some private student loan companies have a deferment policy, allowing you to postpone payments for up to 90 days, depending on your unique circumstances. If your lender doesn’t provide any options for financial relief, you can consider alternatives to deferment and forbearance. (See more on this below)
How to apply for student loan deferment and forbearance
Applying for deferment
You can apply for a federal loan deferment by contacting your student loan servicer — use your StudentAid.gov account to track them down — or by filling out the relevant form below. For private loans, your servicer can discuss available options with you.
Be sure to continue making payments until your deferment period begins. If you skip payments and your deferment request is denied, you’ll be considered delinquent and will risk defaulting on your loan.
Forms for requesting a federal student loan deferment
You may also need to submit documentation to support your request and demonstrate that you meet the eligibility requirements.
Applying for forbearance
Remember, keeping up with on-time payments until your forbearance period begins is crucial. Falling behind on student loan payments could harm your credit score.
Alternatives to student loan deferment and forbearance
Although deferment and forbearance can help during tough times, they aren’t necessarily the best solutions. Consider the following options if you need long-term financial relief.
- Income-driven repayment plan: The Department of Education offers four income-driven repayment plans to help lower your monthly payment based on your income and family size.
- Student loan refinancing: Refinancing allows you to trade out current loans for a new loan with a lower interest rate, potentially shaving thousands off your overall student loan debt. However, it’s generally not worth refinancing federal student loans since you’ll lose access to federal benefits and protections.
- Budgeting skills: It might be wise to restructure your budget if you can’t keep up with your bills. Consider starting a side hustle to boost your income while trimming back unnecessary expenses or luxuries.