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Student Loan Deferment vs. Forbearance: How to Choose

Federal student loan deferment and forbearance can help you postpone student loan payments — but there are long-term costs to consider first.

Eric Rosenberg Eric Rosenberg Edited by Ashley Harrison Updated March 8, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Editor’s note: In response to the coronavirus national emergency, interest, payments and collections of federally-held student loans have been suspended through at least May 1, 2022.

If you’re struggling to keep up with your student loans, you might be able to temporarily pause your payments student loan deferment or forbearance.

Deferment and forbearance both pause your monthly payments, but they work in different ways. If you have eligible loans, interest may stop accruing during deferment. With forbearance, your loans always continue to accrue interest, which is then added to your balance when you begin repayment.

Here’s what to consider before choosing deferment or forbearance:

  • Deferment vs. forbearance
  • What is student loan forbearance?
  • What is student loan deferment?
  • Private student loan deferment vs. forbearance
  • When to choose deferment vs. forbearance
  • Alternatives to deferment and forbearance
  • What to do if your student loans are in default

Deferment vs. forbearance

If you’re considering deferment vs. forbearance, here are several important points to keep in mind:

DefermentForbearance
Interest accrualDepends on loanYes
When to consider
  • Financial hardship
  • Going back to school
  • Military service
  • Other situations
Financial hardship
How to applySubmit federal deferment form or contact loan servicerContact loan servicer
EligibilityVaries based on the type of defermentLoan servicer's discretion
AvailablityGranted by servicer in certain situations
  • General (or discretionary) forbearance: Granted at loan servicer’s discretion
  • Mandatory forbearance: Must be granted by servicer in certain situations
Credit impactNoneNone

What is student loan forbearance?

Student loan forbearance lets you temporarily pause your student loan payments for a set period of time. But, after that period, any interest that built up during the break will capitalize. That means the interest is added to the account balance that you have to pay back. Because of this, forbearance is only good for a last resort.

There are two types of forbearance:

  • General (or discretionary) forbearance: Up to your loan servicer to grant
  • Mandatory forbearance: Must be provided if you qualify under specific programs for military, AmeriCorps, or teachers, as well as other limited circumstances

How to apply for student loan forbearance

General forbearance is at the discretion of your student loan servicer. To apply, complete the federal forbearance form and send it to your servicer or follow these steps:

  • Contact your servicer: If you don’t know your student loan servicer, check your latest statement to see who you pay and how to contact them. In some cases, you can request forbearance over the phone. Other servicers might require a written request or form.
  • Continue making your payments: Until you have received a written confirmation that your forbearance is approved, continue making the minimum payments as scheduled.
  • Reapply or resume payments: If you need to extend your forbearance, contact your loan servicer before the end date. Otherwise, resume your scheduled payments, since missed payments could put you into student loan default.

What is student loan deferment?

Student loan deferment is another way to temporarily postpone student loan payments. Unlike forbearance, interest doesn’t continue accruing on subsidized federal student loans and Perkins loans. But other types of loans still accrue interest. If you’re eligible, deferment is generally a better choice than forbearance.

Deferment is available if you are:

  • In economic hardship
  • In school
  • Unemployed
  • Military

Other limited circumstances could also be eligible. Like forbearance, you can request deferment through your loan servicer.

How to apply for student loan deferment

Applying for deferment is similar to forbearance. Just follow these steps to get started:

  • Contact your loan servicer: If you don’t know your student loan servicer, check your latest statement to see who you pay and how to contact them.
  • Complete the deferment form: Go to the Federal Student Aid website and complete the appropriate form for your situation.
  • Submit your form and documentation: Gather your forms and any required documents and submit them to your loan servicer for approval.
  • Continue making your payments: Until you’re approved for deferment, you must keep making your payments. Stopping early could harm your credit or lead to default.
  • Reapply or resume payments: If your deferment is ending and you need more time, contact your loan servicer to reapply. Otherwise, continue your payments.

Keep reading: Statute of Limitations on Private Student Loans: State Guide

Private student loan deferment vs. forbearance

Private student loans aren’t eligible for federal student loan deferment or forbearance. Instead, pausing your payments is up to your lender.

They might be willing to work with you and give you a break, but you can count on having to pay everything back, including accrued interest, when you resume your regular payments.

Tip: In some cases (such as economic hardship), your lender might let you make interest-only payments for a short period of time.

If you’re struggling to make your payments, be sure to reach out to your lender to see what assistance might be available to you.

When to choose deferment vs. forbearance

Deferment and forbearance are both temporary, so they shouldn’t be used for long-term financial hardship. But if you’re undergoing a short-term hardship, deferment or forbearance might be right for you.

Here are some situations and when you should deferment or forbearance:

SituationDeferment or forbearance
Unemployed and looking for a new jobDeferment
Going back to schoolDeferment
Joining the armed forcesDeferment
Temporary illness or injuryDeferment or forbearance

Keep in mind that if you should choose forbearance, your loan balance will grow every month you don’t make payments. Generally, deferment is a better choice.

Alternatives to deferment and forbearance

If you don’t qualify for deferment, have unsubsidized loans, or just want a better option, there are alternatives to deferment and forbearance. Here are a couple of alternatives to consider:

Income-driven repayment

Federal student loan borrowers have several repayment options available to them, including income-driven repayment (IDR) plans. If you sign up for an IDR plan, your payments will be based on your income — typically 10% to 20% of your discretionary income.

This could significantly reduce your monthly payments — possibly even bringing them down to $0 if you are unemployed or have a low income. Additionally, you could have any remaining balance forgiven after 20 or 25 years, depending on the plan.

Student loan refinancing

Student loan refinancing is the process of paying off your old loans with a new private student loan — leaving you with just one loan and payment to manage.

Depending on your credit, refinancing might get you a lower interest rate, which could save you money on interest and potentially help you pay off your loans faster.

Or you could opt to extend your repayment term to reduce your monthly payments and lessen the strain on your budget — though you’ll pay more interest over time with a longer term.

Tip: Refinancing could be a better option than deferment or forbearance since you won’t have to worry about accruing interest.

Just keep in mind that unlike with deferment or forbearance, you’ll typically need good to excellent credit to qualify for refinancing — a good credit score is usually considered to be 700 or higher.

Also note that while you can refinance both federal and private student loans, refinancing federal loans will cost you access to federal benefits and protections — such as IDR plans and student loan forgiveness programs.

If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for your situation.

Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.

Find out if refinancing is right for you

  • Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders with no impact on your credit score
  • Won’t impact credit score – Checking rates on Credible takes about 2 minutes and won’t impact your credit score
  • Data privacy – We don’t sell your information, so you won’t get calls or emails from multiple lenders

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What to do if your student loans are in default

If you miss a payment, your student loan will be considered delinquent. After missing payments for a certain amount of time (270 days for most federal student loans and 120 days for most private loans), your loan will enter default status.

Once your loan has entered default, you’ll no longer be eligible for deferment or forbearance options. However, if you have federal student loans, you have a couple of options that could help you get out of default:

  • Rehabilitation: With this option, you’ll have to make on-time payments for nine to 10 consecutive months, depending on the type of federal loans you have. If you successfully make the required payments, the default status will be removed from your loan as well as from your credit report.
  • Consolidation: Another strategy is to consolidate your federal loans into a Direct Consolidation Loan, which could extend your repayment term up to 30 years. Keep in mind that before you can consolidate, you’ll have to either agree to repay the loan on an IDR plan or make three consecutive, on-time, full payments first. Additionally, unlike rehabilitation, consolidation won’t remove the default status from your credit report.
Tip: If you have private student loans in default, you won’t be eligible for these federal programs.

However, many private lenders offer a rehabilitation program that could help you get private loans out of default. Be sure to reach out to your lender to see what assistance is available to you.

Keep Reading: How to Get Student Loan Repayment Help

About the author
Eric Rosenberg
Eric Rosenberg

Eric Rosenberg is an expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

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Student Loan Deferment & Forbearance


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