Deferment or Forbearance: Which Is Right for You?

Understanding Deferment and Forbearance

Federal student loan deferment and forbearance are two relief options that allow you to temporarily pause or reduce your monthly payments. They are not the same as forgiveness or discharge—you are pausing payments, not eliminating your debt. Both options can provide breathing room during financial hardship, but they have important differences in how interest accrues and which loans qualify.

Choosing the right option depends on your situation and long-term goals. Deferment is often more favorable because, for subsidized loans, interest does not accrue, meaning your balance doesn't grow while payments are paused. Forbearance, on the other hand, always accrues interest on all loan types, which can increase the total amount you owe.

Sources: Federal Student Aid, The College Investor

What Is Deferment?

Deferment is a period during which you can temporarily stop making your federal student loan payments. It is granted for specific circumstances, such as being enrolled in school, experiencing unemployment, or facing economic hardship. The key benefit is that, for subsidized loans, interest does not accrue during deferment, so your loan balance remains unchanged.

For unsubsidized loans, interest does accrue during deferment. If you don't pay the accruing interest, it may be capitalized, meaning it is added to your principal balance at the end of the deferment period, which increases the total cost of your loan.

Sources: Federal Student Aid, Cambridge Credit Counseling

What Is Forbearance?

Forbearance is another way to temporarily pause or reduce your federal student loan payments. It is typically granted when you are experiencing financial hardship, medical expenses, or other situations that make it difficult to pay, but you don't qualify for deferment. Unlike deferment, interest always accrues on all loan types during forbearance, including subsidized loans.

Because interest accrues, your loan balance will grow during forbearance. Any unpaid interest may be capitalized at the end of the forbearance period, adding to your principal and increasing the amount you'll repay over time.

Sources: Federal Student Aid, American Medical Student Association (AMSA), Cambridge Credit Counseling

Deferment vs. Forbearance: Key Differences

The table below summarizes the main differences between deferment and forbearance, helping you understand which option might be better for your situation based on interest accrual and eligibility.

Sources: Federal Student Aid, Cambridge Credit Counseling, The College Investor, PHEAA (Pennsylvania Higher Education Assistance Agency)

Eligibility for Deferment

Deferment is available for specific reasons. Common categories include in-school deferment, unemployment deferment, economic hardship deferment, military service deferment, cancer treatment deferment, rehabilitation training deferment, and post-active duty deferment.

To qualify for in-school deferment, you generally must be enrolled at least half-time at an eligible institution. Military service deferment is available while you are on active duty or performing qualifying National Guard duty during a war or national emergency. Cancer treatment deferment applies during your treatment and for up to 18 months after the treatment ends. Rehabilitation training deferment covers approved rehabilitation programs for individuals with disabilities. Post-active duty deferment is available during the 13-month period following qualifying active duty service.

If you think you qualify for a deferment, contact your loan servicer to request the appropriate form and understand the documentation required.

• In-School Deferment: typically requires at least half-time enrollment.
• Unemployment Deferment: for those unemployed or working less than 30 hours per week.
• Economic Hardship Deferment: based on income, public assistance, or Peace Corps service.
• Military Service Deferment: for active duty or qualifying National Guard duty.
• Cancer Treatment Deferment: during and up to 18 months after treatment.
• Rehabilitation Training Deferment: for approved rehabilitation programs.
• Post-Active Duty Deferment: for the 13 months after qualifying active duty service.

Sources: Federal Student Aid, College Ave, American Medical Student Association (AMSA)

Eligibility for Forbearance

Forbearance options include general forbearance, economic hardship (FFEL) / loan debt burden (DL) forbearance, internship/residency forbearance, active military duty forbearance, cancer treatment forbearance, Department of Defense (DOD) loan repayment program forbearance, national community service forbearance, and teacher loan forgiveness forbearance.

General forbearance may be granted for temporary financial hardship or if you are attending school and not eligible for In-School Deferment. It is typically granted for up to 12 months at a time, with a cumulative limit of three years for this type.

Mandatory forbearance categories, such as loan debt burden, may have their own limits. For example, loan debt burden forbearance also has a three-year cumulative limit. Other mandatory forbearance types may not have a cumulative limit, so checking with your servicer is important.

• General Forbearance
• Economic Hardship (FFEL) / Loan Debt Burden (DL) Forbearance
• Internship/Residency Forbearance
• Active Military Duty Forbearance
• Cancer Treatment Forbearance
• Department of Defense (DOD) Loan Repayment Program Forbearance
• National Community Service Forbearance
• Teacher Loan Forgiveness Forbearance

Sources: Federal Student Aid, Cambridge Credit Counseling, Investopedia

How to Request Deferment or Forbearance

The application process for deferment or forbearance is similar. You need to contact your loan servicer, request the appropriate form, and submit the required documentation. It's important to continue making payments until your servicer confirms that your request has been approved; stopping payments before approval could lead to delinquency.

Required documentation varies by the reason for your request. For example, for unemployment deferment, you may need to provide proof of unemployment benefits or registration with an employment agency. Your servicer will tell you exactly what is needed.

Once approved, the deferment or forbearance will be applied to your account, and you'll receive written confirmation. Keep records of all correspondence for your files.

• Contact your loan servicer to request the appropriate form.
• Complete the form and gather required documentation.
• Submit the form and keep copies.
• Continue making payments until you receive written approval.

Sources: American Medical Student Association (AMSA), Cambridge Credit Counseling

Interest Considerations

Interest accrual is a critical difference between deferment and forbearance. During deferment, interest does not accrue on subsidized loans, but it does accrue on unsubsidized loans. During forbearance, interest accrues on all loan types, including subsidized loans.

Any unpaid interest that accrues during either deferment or forbearance may be capitalized, meaning it gets added to your principal balance. This increases the total amount you owe and the interest you'll pay over the life of the loan. To avoid this, consider paying the accruing interest during the pause period.

Understanding these interest implications can help you decide whether deferment or forbearance is the better option for your financial situation.

Sources: Federal Student Aid, American Medical Student Association (AMSA), Cambridge Credit Counseling, National Conference of State Legislatures (NCSL), PHEAA (Pennsylvania Higher Education Assistance Agency)

Impact on Loan Forgiveness

Deferment and forbearance periods may affect your progress toward loan forgiveness programs, but the rules can vary by program. Borrowers pursuing Public Service Loan Forgiveness (PSLF) or income-driven repayment forgiveness should check with their loan servicer or program administrator to understand how a pause in payments might impact their timeline.

This page does not provide detailed guidance on loan forgiveness programs; for that, see our section on forgiveness programs.

Sources: Cambridge Credit Counseling, The College Investor

Upcoming Changes: What to Know for Loans Disbursed On or After July 1, 2027

The One Big Beautiful Bill Act introduces significant changes to deferment and forbearance for federal student loans first disbursed on or after July 1, 2027. If you take out a new federal student loan on or after that date, you will no longer be able to use unemployment or economic hardship deferment. Other deferment reasons, such as cancer treatment, graduate fellowship, in-school, military service, and rehabilitation training, remain available.

For those new loans, forbearance will be capped at 9 months within any 24-month period, regardless of the type of forbearance. This is a significant reduction from the current limits, which can go up to three years for general forbearance.

Existing loans disbursed before July 1, 2027, will not be affected by these restrictions, so borrowers with older loans retain access to the current deferment and forbearance rules. If you consolidate existing loans after that date, the new consolidation loan may be subject to the more restrictive rules, so be sure to weigh this carefully.

Sources: College Ave, The College Investor, American Medical Student Association (AMSA), Cambridge Credit Counseling, National Conference of State Legislatures (NCSL), Investopedia