What’s the Difference Between Student Loan Deferment and Forbearance?

What Is Student Loan Deferment?

Deferment can pause your payments for a variety of reasons. If you have federal student loans, you may be able to qualify for student loan deferment if:

• You're returning to school. You'll receive automatic in-school deferment while you maintain half-time enrollment status.
• You're on or have recently returned from active-duty military service. Ends when you resume enrollment on a half-time basis or 13 months after completing active-duty service and any applicable grace period, whichever comes first.
• You're unemployed. Lasts up to three years while you receive unemployment benefits and are seeking but unable to find employment.
• You've enrolled in an approved rehabilitation program. You may qualify while you're in an approved rehab program for vocational, drug abuse, mental health or alcohol abuse treatment.
• You're undergoing cancer treatment. You may be eligible until six months after your cancer treatment ends.
• You're enrolled in a graduate fellowship program. You may qualify while in an approved fellowship program.
• You're experiencing financial hardship. Lasts up to three years if you're receiving a means-tested government benefit, work full time but your income is below the poverty line or are serving in the Peace Corps.
• You're a parent who took out parent PLUS loans, and your child is still in school. You may request deferment as long as the student maintains half-time enrollment status.

In contrast, private lenders may only offer deferment if you're returning to school, but that's not the case with all lenders.

Learn more: Types of Federal Student Loan Deferment

Pros and Cons of Student Loan Deferment

Here are some benefits and drawbacks of student loan deferment to consider before applying with your loan servicer.

What Is Student Loan Forbearance?

Like deferment, student loan forbearance can pause your monthly payments for various reasons. There are two types of federal student loan forbearance: mandatory and general.

With mandatory forbearance, your loan servicer is required to give you forbearance if you request it. This applies if you meet certain criteria for the following situations:

• You're serving in AmeriCorps. You're eligible if you've received a national service award for your position.
• You're in the U.S. Department of Defense Student Loan Repayment program. You may qualify if you're eligible for partial repayment under the program.
• You're in a medical or dental internship or residency program. You may be eligible if you don't qualify for deferment and you meet other criteria.
• You're a member of the National Guard. You've been activated by your governor but aren't eligible for military deferment.
• You're in the Teacher Loan Forgiveness program. You qualify if you're currently performing service that qualifies you for the program.
• Your student loan debt burden is high. You may be eligible if your monthly payment is more than 20% of your gross monthly income.

General forbearance is also referred to as "discretionary forbearance" because it's at your loan servicer's discretion whether or not to approve your application. You may apply for this option if you're experiencing financial difficulties, have medical expenses, have had a recent change in employment or for any other reason that your loan servicer accepts.

Regardless of the type of forbearance you request, it can only be granted for up to 12 months at a time. If you need to renew, the cumulative limit is three years for general forbearance and for mandatory forbearance due to student loan debt burden. However, there is no cumulative limit for other forms of mandatory forbearance.

For private student loans, terms and eligibility requirements can vary from lender to lender, and some may not offer forbearance at all.

Pros and Cons of Student Loan Forbearance

If you're considering student loan forbearance, here are some potential advantages and disadvantages to keep in mind.

Student Loan Deferment vs. Forbearance

Student loan deferment and forbearance both offer temporary relief by letting you pause your payments, but they're not interchangeable.

These programs differ in various ways, and understanding the key differences can help you choose the option that makes the most sense for your situation.

Eligibility

• Deferment: You may qualify if you're enrolled in school at least half time, unemployed, undergoing cancer treatment, experiencing economic hardship, in an approved rehab program or serving in the military or Peace Corps. In-school deferment is typically granted automatically for students, but parents must request it for parent PLUS loans.
• Forbearance: Available for a broader range of financial or personal reasons, including medical expenses, job loss or high student loan debt relative to income. For federal loans, mandatory forbearance must be granted if you meet specific criteria, but general forbearance is up to your loan servicer's discretion.

Length

• Deferment: Can last up to three years or longer, depending on the reason. Some types, like in-school or military deferment, may extend for as long as you meet the requirements.
• Forbearance: Typically granted for 12 months at a time. Cumulative limits may apply, especially with general forbearance, which has a three-year cap for federal loans.

Interest Accrual

• Deferment: Interest does not accrue on subsidized federal loans or Perkins loans during the deferment period. Interest does accrue on unsubsidized and most private loans, and it's typically capitalized and added to your loan balance when you resume payments.
• Forbearance: Interest always accrues, regardless of loan type, but it won't be capitalized and added to your loan balance.

Should You Choose Deferment or Forbearance?

Both deferment and forbearance can pause your student loan payments, but the right choice depends on your financial situation and the type of loans you have.

While deferment typically offers more favorable terms—especially if you have subsidized loans—it's not always available. Forbearance, on the other hand, may be easier to get when you're in a pinch, but it comes with more financial drawbacks.

When to Choose Deferment

Here are some situations where deferment may make more sense:

• You have subsidized federal loans. If your loans are subsidized or Perkins loans, interest won't accrue during deferment, saving you money while your payments are paused.
• You're enrolled in school at least half time. You'll likely qualify for automatic in-school deferment, making it an easy way to postpone payments while you focus on your studies.
• You're facing long-term unemployment or economic hardship. Deferment can provide up to three years of relief if you're receiving government assistance, living below the poverty line or unable to find work.
• You qualify based on other specific circumstances. Cancer treatment, active-duty military service, graduate fellowships and rehab programs often come with specialized deferment options that last through the duration of your service or treatment and potentially a short period after.

When to Choose Forbearance

Forbearance may be a better option in the following scenarios:

• You don't qualify for deferment. If your situation doesn't meet deferment criteria, forbearance might be your best option for temporary relief, especially through general forbearance.
• You're dealing with short-term financial hardship. Forbearance can buy you time to stabilize your finances after unexpected expenses, a job loss or a temporary drop in income.
• You qualify based on other specific circumstances. If you're not eligible for deferment, mandatory forbearance is available for medical and dental residents and interns working toward completing their training. The same is true for eligible AmeriCorps, teacher, National Guard and Department of Defense roles that qualify for mandatory forbearance.
• Your student loan debt is overwhelming. If your payments exceed 20% of your gross income, you may qualify for mandatory forbearance based on debt burden, even if you're not facing a financial emergency.

How to Apply for Student Loan Deferment

If you have federal student loans, you'll submit your request directly to your loan servicer using the correct deferment form for your situation.

For private student loans, contact your lender to find out if deferment is an option and what the application process looks like.

How to Apply for Student Loan Forbearance

If you have federal student loans, review the forbearance application forms and select the one that best fits your situation, then submit it to your loan servicer.

To apply for private student loan forbearance, contact your lender directly to ask about your options and how to apply for relief.

Alternatives to Deferment and Forbearance

Every situation is different, but it's always a good idea to research all of your options to determine the best course of action. Some potential alternatives to both deferment and forbearance include:

• Income-driven repayment plans: For longer-term relief on federal loans, you may apply for an income-driven repayment plan. These plans can reduce your monthly payment based on your income and potentially result in forgiveness after you complete an extended repayment plan.
• Student loan refinancing: Refinancing federal student loans with a private lender may not be the right move if you want access to better relief programs in the future. But if you have private loans, you can refinance them with another lender that offers better relief options or can give you a longer repayment term, resulting in a lower payment.
• Budgeting: Depending on your situation, you may be able to better afford your student loan payments by scrutinizing your budget and making some adjustments. Take a look at your expenses and look for areas of discretionary spending where you can cut back and reallocate those funds toward your student loans.
• Picking up a side gig: If you've tried everything and still can't quite find enough money to pay your student loans, consider taking up a side gig. Even driving for a rideshare app a few nights a month or pet sitting during the summers can give you the extra boost you need to ensure your payments get made on time.

Learn more: Options if You Can't Pay Your Student Loans

Focus on Protecting Your Credit Score

Regardless of how you choose to handle your student loans, it's crucial that you prioritize protecting your credit score from late payments and default. Deferment and forbearance can do that, but consider other options to avoid missing payments.

Also, consider using Experian's free credit monitoring service to track your credit score and Experian credit report, so you can see how your actions impact your credit over time.