Deferment vs. forbearance: Which is best for your student loan?

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Deferment and forbearance are student loan options that freeze student loan payments for a specified time frame and can help keep your account in good standing.

The main difference between deferment and forbearance is that interest always accrues when you’re in federal forbearance, while deferment is interest-free in some cases. Generally, the question of whether to request forbearance versus deferment comes down to which you qualify for.

Key takeaways: Deferment vs. forbearance

  • In federal student loan forbearance, your interest continues to accrue. If you qualify for a deferment, the accrual of your interest is paused if you have subsidized loans or Perkins Loans.
  • The qualifying events for forbearance and deferment are different, but in many cases they’re situations that temporarily reduce your income.
  • If you qualify for deferment, your servicer must grant it. Forbearance is typically at your loan servicer’s discretion, but in some situations it is mandatory.
  • Forbearance usually lasts for up to 12 months at a time, while deferment has differing lengths, depending on the type of deferment.

What is the difference between deferment and forbearance?

Both deferment and forbearance allow you to postpone student loan payments, but they differ in a few key ways.

For one, deferment on federal student loans must be tied to a qualifying event. The qualifying events differ for forbearance, and eligibility is determined by your loan servicer.

Additionally, interest accrues on all federal student loans during forbearance and will be added to the loan balance later, a process known as capitalization. This isn’t the case for deferment; while interest will still accrue on certain types of loans, other types of loans will not accrue interest during periods of deferment.

Deferment vs. forbearance: Federal student loans

Deferment Forbearance
Length Differs by deferment type Up to 3 years
Qualification requirements Unemployment, cancer treatment, military service, economic hardship and more General forbearance: Financial hardship or other reasons acceptable to your loan servicer
Mandatory forbearance: Registration for AmeriCorps, medical residency, National Guard and more
Interest accrual Interest generally doesn’t accrue on Direct Subsidized Loans, Subsidized Federal Stafford Loans, Federal Perkins Loans, the subsidized portion of Direct Consolidation Loans or the subsidized portion of FFEL Consolidation Loans Interest accrues and capitalizes
Credit impact Will not impact your credit score but will be noted in your credit report Will not impact your credit score but will be noted in your credit report

Do private student loans offer deferment and forbearance?

While all federal student loans follow the same guidelines for forbearance and deferment, the rules are different for private student loans. If you have private student loans and you are looking for forbearance and deferment options, you should contact your loan servicer and find out what options it may have for you.

Not every private student loan servicer will offer forbearance options, but many offer options for loan forbearance if you meet certain requirements. More private student loan servicers have offered relief options specifically due to the COVID-19 pandemic, so they may currently have temporary forbearance or debt relief options, even if this isn’t something they usually offer borrowers.

If you are looking for forbearance or deferment options on your private student loans, get all of the details upfront. Just like forbearance or deferment on federal loans, these options will be temporary. Understand the timeline your servicer offers for forbearance, as well as whether interest accrues during that time.

What is student loan forbearance?

Federal student loan forbearance allows you to pause student loan payments for up to 12 months at a time, with a three-year cap. Interest on your loans will accrue while you’re in forbearance. At the end of forbearance, your loan servicer will add unpaid interest to your principal balance, a practice called “capitalization.” This increases how much you owe, and interest will compound on a larger balance. The only type of loan not subject to capitalization is Perkins Loans.

There are two types of forbearance for federal student loans:

  • General forbearance: This is granted at your loan servicer’s discretion. You may request this type of forbearance if you have financial difficulties, a change in employment, medical expenses or other hardships.
  • Mandatory forbearance: The loan servicer must grant the forbearance if you are enrolled in a medical or dental internship or residency, serving in the AmeriCorps, eligible for the U.S. Department of Defense Student Loan Repayment Program, paying more than 20 percent of your income toward federal student loans each month or eligible for teacher loan forgiveness.

The Department of Education may also implement periods of administrative forbearance, which applies to all federal student loan borrowers. This is the case with the coronavirus relief measures established in early 2020, which halts student loan payments and interest accrual on all federal student loans through Sept. 30, 2021.

If you have private student loans, forbearance options may be available to you, but forbearance options and eligibility differ for each private loan servicer. Talk to your loan servicer to find out what option may be available to you.

How to apply for student loan forbearance

To apply for federal student loan forbearance, you should use the applicable student loan forbearance form. There is a form to apply for general forbearance and forms for each type of mandatory forbearance. These forms work for all loan servicers. If you’re looking to apply for student loan forbearance, it still makes sense to contact your loan servicer directly, since your servicer will be able to guide you through the forbearance process and let you know about any other repayment options that it might offer.

Note that you should keep making your payments until your servicer confirms that you qualify for forbearance. If you stop, you may be considered delinquent, which can affect your forbearance application.

To apply for forbearance on private student loans, contact your loan servicer. The process to apply will be different for each servicer.

What is student loan deferment?

Federal student loan deferment also freezes your loan payments, but it comes with more perks than forbearance. The time frames are longer in some cases for deferment than forbearance, and interest won’t accrue on Direct Subsidized Loans, Subsidized Federal Stafford Loans, Perkins Loans and the subsidized portions of Direct Consolidation Loans and FFEL Consolidation Loans. Interest will accrue on other types of federal student loans in deferment, though.

Deferment is available if you are:

  • Undergoing cancer treatment.
  • Living on a monthly income less than 150 percent of your state’s poverty guidelines or receiving a means-tested benefit like welfare.
  • Serving in the Peace Corps.
  • Enrolled at least half time in an undergraduate or graduate degree program.
  • On active-duty or post-active-duty military service.
  • A parent who received a Direct PLUS Loan and your child is enrolled at least half time in school.
  • Enrolled in an approved rehabilitation training program.
  • Unemployed and unable to find full-time employment.

Similar to forbearance, deferment options for private student loans vary from servicer to servicer. Check with your private student loan servicer to determine your options for private loan deferment.

How to apply for student loan deferment

To apply for federal student loan deferment, contact your servicer or fill out a request for the specific type of deferment you’re pursuing. As with applying for forbearance, it’s important to continue making your payments until your servicer confirms that you qualify for deferment.

To apply for private student loan deferment, contact your lender to ask about options and to see if you qualify.

Which is better for me?

If you qualify for student loan deferment, it’s usually a better option. You may be able to freeze payments for longer than you would in forbearance, and interest won’t accrue if you have subsidized loans or Perkins Loans. But if you’re in financial trouble and there’s no deferment available for your situation, then apply for forbearance.

But before taking the next steps, make sure that you qualify for deferment or forbearance. You can’t apply for either option if your federal student loans are in default. You also must meet specific requirements for deferment or mandatory forbearance. Check the criteria before pursuing these options.

Alternatives to student loan deferment and forbearance

Student loan forbearance and deferment are temporary solutions that can help you through a short-term hardship. But there may be other options that are better for your situation or that will help you make a plan for the long term.

Income-driven repayment

Income-driven repayment plans, such as Pay As You Earn and Revised Pay As You Earn, base your monthly student loan payments on your income and family size. After enrolling in one of these plans, your payments may become more manageable — in some cases, your payment could be as low as $0 per month. Income-driven repayment plans also come with loan forgiveness. If your loan isn’t paid in full after 20 or 25 years, the remaining balance is forgiven.

Student loan refinancing

Another option is refinancing your federal student loans into a private loan. A strong credit history can help you qualify for a lower interest rate, which can lower your monthly payments. However, you give up all of the borrower protections that come with federal student loans, including income-driven repayment plans and the current period of administrative forbearance for COVID-19. Some private student loans come with deferment and forbearance options, although they’re not as generous as what you’d find on federal student loans.

Budget restructuring

Examine your monthly expenses to see if you can eliminate any expenses to make more room for your student loan payment. Things like rent, utilities, your cellphone plan and groceries are critical. But things like cable bills, streaming services and gym memberships are not. You might also consider making bigger changes, such as moving into a cheaper apartment or getting a part-time job to earn more money.

The bottom line

Student loan deferment and forbearance both allow student loan borrowers to hit the pause button on payments. Deferment sometimes offers more perks than forbearance, so check this option first. If there’s no deferment available for your financial situation, then apply for forbearance.

But these are short-term solutions, and you might need to find other ways to make room in your budget for student loan payments.

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Written by
Kim Porter
Contributing writer
Kim Porter is a personal finance expert who loves talking budgets, credit cards and student loans. In addition to serving as a contributing writer for Bankrate, Porter also writes for publications such as U.S. News & World Report, Credit Karma and Reviewed.com. When she's not writing or reading, you can usually find her planning a trip or training for her next race.
Edited by
Student loans editor