Student Loan Deferment vs. Forbearance: Which Payment Pause Is Better?
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If you need solutions for your student debt:
Find help: Explore legit student loan help resources and organizations to contact.
Pause payments: Find out the differences between student loan forbearance and deferment.
Get out of default: Learn the consequences of and remedies for defaulting on your student debt.
Declare bankruptcy: Review how to discharge student debt in bankruptcy.
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Deferment and forbearance can both postpone student loan payments when you can’t afford them. The major difference is that forbearance always increases the amount you owe, while deferment can be 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 are 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.
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 no set maximum for most federal loans. |
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. Look for loans labeled “Perkins” or “subsidized” to identify which won't accrue interest during a deferment.
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.
Deferment vs. forbearance 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 loans 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.
Consider income-driven repayment instead
If you’re debating deferment vs. forbearance because you can’t afford your federal student loan payments long term, apply for income-driven repayment instead.
Income-driven plans tie monthly payments to your earnings, and payments can be as small as $0 if you're unemployed or underemployed. And while paying less can also cause interest to grow, income-driven repayment has the added benefit of forgiveness after 20 or 25 years of repayment.
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.
