Understanding the Difference Between Forbearance and Deferment

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Updated on Friday, April 30, 2021

Need a break from repaying your student loans? Both deferment and forbearance allow you to postpone payments on your federal student loans temporarily, but there are also differences between them.

In periods of deferment, for example, subsidized loans don’t accrue interest, so you don’t have to worry about your balance growing. Forbearance, however, can be easier to qualify for.

Generally, all federal loans are eligible for deferment or forbearance, but only some private student loans offer this option.

[Note: Some details may have changed due to coronavirus pandemic measures. Read more here.]

To get the full picture on pausing your student loan repayment, let’s look at the following topics:

Key differences between forbearance and deferment

One major difference between forbearance and deferment has to do with subsidized loans, which are loans that are available to undergraduate students with financial need. If you defer subsidized loans, you won’t have to worry about any interest accruing on your balance.

This is true whether you’re in your grace period during college or get a deferment for an alternative reason, such as economic hardship. That said, your unsubsidized loans will accrue interest during a period of deferment. And typically, all loans accrue interest during a period of forbearance.

The only exception to this is the emergency forbearance that has been put in place in response to the coronavirus pandemic (in which both payments and interest have been suspended on qualifying loans).

So if you have any subsidized loans, deferment is usually the better option. But if you don’t, there’s no major difference between forbearance and deferment, apart from the criteria you’ll need to meet to qualify.

This chart shows the difference between forbearance and deferment, specifically for subsidized loans.

Qualifying for forbearance and deferment

Another major difference between forbearance and deferment has to do with the criteria you’ll need to meet to be eligible. There are two types of forbearance: mandatory and discretionary.

If you meet a requirement for mandatory forbearance, your loan servicer has to grant your request. If you don’t, your loan servicer can decide whether or not to pause your payments.

Mandatory forbearance

Forbearance will be granted if any of the following pertain to you:

  • You are enrolled in a medical or dental internship or residency.
  • You are serving in a national service position, such as AmeriCorps, are part of the Department of Defense repayment program, are in the National Guard or are eligible for teacher loan forgiveness programs.
  • Your monthly loan payment is 20% or more of your gross monthly income.
  • You are teaching in a program that qualifies for loan forgiveness.
  • You qualify for partial repayment under the U.S. Department of Defense Student Loan Repayment Program.
  • You are called into active military duty.

Discretionary forbearance

Forbearance may be granted if any of the following apply:

  • You are enrolled less than half time (each school has their own definition of ‘half time’).
  • Poor health.
  • Unemployment (beyond the maximum deferment time limit).
  • A reduction in work hours.
  • A life-changing circumstance.

Deferment

You can qualify for a deferment if you are:

  • Enrolled at least half time at an eligible postsecondary school.
  • In a full-time course of study in a graduate fellowship program.
  • In an approved full-time rehabilitation program for individuals with disabilities.
  • Unemployed or unable to find full-time employment (for a maximum of three years).
  • Experiencing an economic hardship (including Peace Corps service) as defined by federal regulations (for a maximum of three years).
  • Serving on active duty during a war or other military operation or national emergency and, if you were serving on or after Oct. 1, 2007, for an additional 180-day period following the demobilization date for your qualifying service.
  • Performing qualifying National Guard duty during a war, other military operation or national emergency and for an additional 180-day period following the completion of your qualifying service.
  • A member of the National Guard or other reserve component of the U.S. armed forces (current or retired) and you are called or ordered to active duty while you are enrolled (or within six months of having been enrolled) at least half time at an eligible school.

Applying for forbearance or deferment

If you’re at risk of falling behind on your student loans, act fast. You don’t want your loans to go into default, as it comes with a host of bad consequences and makes your loans ineligible for forbearance or deferment until you get them back into active standing.

Start taking action by reaching out to your loan servicer. Be sure to keep the lines of communication open. You’ll need to work with your loan servicer(s) to apply for deferment or forbearance. You can sign into your Federal Student Aid account to see the details of your loans and loan servicers.

Your student loans can be placed in deferment for up to three years. Forbearance is typically granted in 12-month intervals for up to three years.

Note that putting loans into deferment or forbearance does not hurt your credit score. That’s another reason why you should pursue forbearance or deferment if you’re at risk of default — missing payments can do serious damage to your credit.

How to restart normal repayment on your student loans

Before your deferment or forbearance term expires, contact the servicer of the loan. You will need to explain your current situation.

Both you and the lender will create a repayment plan that will work for your new situation. Note that if your situation changes before your deferment or forbearance period expires, you can resume payments at any time.

If you’re able to make small payments, your lender might recommend an income-driven repayment plan, which adjusts your monthly payments in accordance with your income and family size.

Final words of advice on forbearance and deferment

If you’re having trouble paying your student loans, contact your loan servicer(s). Keep paying toward the current agreement. Do not let your loans go into default. If they do go into default, you must get current before applying for either deferment or forbearance.

If your loans are current, begin the application process for deferment or forbearance. Lenders want their money. They are willing to work with you to make that happen — even if payments are delayed. Talk with them. They will listen.

Whether you go with deferment or forbearance, what’s important is you’re addressing your situation and doing what it takes to avoid default.