Student Loan Deferment vs. Forbearance: Which Payment Pause Is Better?
If you qualify for deferment, it’s a better option than forbearance. But neither is an ideal long-term solution.
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Deferment and forbearance can both postpone student loan payments when you can’t afford them. The major difference is interest accrues during forbearance, while deferment is interest-free for certain types of federal loans.
When considering deferment versus forbearance, the right choice will depend on your personal situation:
Deferment: Generally better if you have subsidized federal student loans or Perkins loans, and you’re unemployed or dealing with significant financial hardship.
Forbearance: Generally better if you don’t qualify for deferment and your financial challenge is temporary.
While both options can help you avoid student loan default, neither is a good long-term solution. If you don’t expect your financial situation to improve, consider enrolling in an income-driven repayment plan instead of pausing repayment.
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What is the difference between deferment and forbearance?
Here’s how deferment and forbearance for federal student loans compare in some key areas.
Deferment | Forbearance | |
|---|---|---|
Length | Length varies by deferment type; some last three years, while others are available as long as you qualify. | No more than 12 months at a time, with some loans having a cumulative limit. |
Qualifications | Tied to a qualifying event like being unemployed or enrolled in school at least half time. | A specific qualifying event is usually not necessary. |
Application process | 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. |
Interest accrual | Interest does not accrue on subsidized federal student loans and Perkins loans. | Interest accrues on all loans. |
Availability | Your servicer must grant you a deferment if you meet its eligibility criteria and have deferment time available. | It’s usually your servicer’s decision whether to grant you forbearance, though forbearance is mandatory in some instances. |
Credit impact | Student loan deferment has no impact on your credit. | Student loan forbearance has no impact on your credit. |
If you aren’t sure what type of federal student loans you have, log in to your studentaid.gov account.
If you've missed payments but your loans haven't defaulted yet, both deferment and forbearance can be applied retroactively to let you catch up.
What is better: Deferment or forbearance?
If you need to take a break from payments, student loan deferment is a better option than forbearance. But you’ll need to qualify for a deferment. You may do so based on the following:
Attending school at least half time.
Being unemployed.
Receiving state or federal assistance — for example, through the Supplemental Nutrition Assistance Program or Temporary Assistance for Needy Families.
Earning a monthly income of less than 150% of your state’s poverty guidelines.
Being on active military duty or in the Peace Corps.
Undergoing treatment for cancer.
Student loan deferment also makes sense if you have subsidized federal student loans or Perkins loans. These loans don’t accrue interest during a deferment, so the amount you owe when the deferment ends will be the same as when it begins. It’s a true break from your loans.
If you don’t qualify for a deferment and expect your financial challenges to be temporary, forbearance may make sense for you.
Consider this example: You were in an accident and have to pay a large medical bill. You don’t have enough money to cover this unexpected cost and your other expenses right now, but you will soon. There’s no deferment for this situation, but you could temporarily put your loans in forbearance.
Placing your loans in forbearance would allow you to put the money from your student loan payment toward your other bills and then resume repayment. Even with the additional interest costs, forbearance would still likely be less expensive than other options, like taking out a payday loan or personal loan.
Forbearance vs. deferment for private student loans
Most private lenders have deferment programs if you’re in the military or enrolled in school. Those that offer forbearance typically do so for at least 12 months total.
Yet despite their different names, deferment and forbearance act the same way for private student loans: Interest always accrues, and you’re always responsible for paying for it. If your lender offers the option to make interest payments while in school, that’s a good way to keep interest from ballooning.
If you can’t afford your private student loan payments and your lender doesn’t offer deferment or forbearance, call and explain your situation. Your lender may provide a different kind of temporary relief, like letting you make interest-only payments or temporarily reducing your interest rate.
Calculate the cost of deferment vs. forbearance
Forbearance always increases the amount you owe, as does deferment if you have unsubsidized loans. See how much these options could add to your balance.
Calculate added interest
How to apply for a forbearance on student loans
If you need to apply for a forbearance on federal student loans, first determine the type of forbearance you need: general or mandatory.
General forbearance may be granted for temporary situations like financial difficulty or change in employment.
Eligibility for mandatory forbearance typically involves service-led activities, like serving as a teacher or with AmeriCorps or the National Guard, among others.
Each type of forbearance requires its own form to complete, and you’ll need to gather documentation to show your eligibility for the forbearance you are requesting.
When your paperwork is complete, send your documents to your student loan servicer and continue to make payments on your loan until you receive confirmation of forbearance approval.
How to apply for student loan deferment
To apply for student loan deferment, determine which type of deferment applies to your situation. Types of deferment include cancer treatment, economic hardship, graduate fellowship, in-school, military service, parent PLUS borrowers, rehabilitation training and unemployment.
Complete a specific form the type of deferment you need, and provide documentation showing your eligibility. You’ll submit these materials to your federal student loan servicer.
Continue paying your student loan until you receive notice of deferment. Failure to do so could result in a delinquent account.
Repayment options for federal and private loans in default
Income-driven repayment, deferment and forbearance are no longer options once federal student loans default. You can return these loans to good standing with options like loan rehabilitation and consolidation. That’s not the case for private loans, though.
Recovery options are more limited when private student loans default. You may need to work with a student loan lawyer on a student loan settlement or even filing for bankruptcy if you won’t be able to repay your debt in full.
A lawyer can also help you understand if the statute of limitations on your student loans has expired, which would eliminate the chance of being sued over your past-due debt.