Deferment and forbearance both allow you to temporarily stop making federal student loan payments, but the key difference lies in how interest is handled. During deferment, the government may pay the interest on subsidized loans, whereas interest always accrues on all loan types during forbearance.
Unexpected financial challenges can happen to anyone, whether you are a recent graduate navigating the job market or a parent managing Plus loans alongside household expenses. Knowing how to pause your payments without derailing your financial future is a critical skill. In this guide, you will learn the specific eligibility requirements for each option, exactly how interest impacts your total loan cost, and a step-by-step decision framework to help you choose the right path for your situation.
While the terms are often used interchangeably, choosing the wrong one can cost you thousands of dollars over the life of your loan. This article focuses on federal student loan options, as private lenders have different policies regarding payment pauses. By understanding these distinctions, you can make a choice that provides immediate relief while protecting your long-term financial health.
Life rarely follows a straight line, and there are valid reasons to hit the pause button on your student loan payments. Common situations where borrowers seek relief include sudden job loss, medical emergencies, a return to graduate school, economic hardship, or military service. These tools are designed to be safety nets, preventing delinquency and default during temporary periods of instability.
Generally, deferment is the preferred option because of its potential interest subsidies, but it requires meeting specific, documented criteria such as unemployment or enrollment in an eligible program. Forbearance is broader and often easier to access for general financial difficulties, but it comes with a higher long-term cost. Before requesting either, it is important to understand a key financial concept: capitalization.
Capitalization adds unpaid interest to your principal balance, meaning you will pay interest on a larger amount going forward. This “interest on interest” effect is why a temporary pause can result in a permanently higher monthly payment once repayment resumes.
It is also vital to recognize that deferment and forbearance are intended for short-term relief. If you are facing ongoing financial difficulty where your income doesn’t support your standard payments, an income-driven repayment (IDR) plan might be a better solution. IDR plans adjust your monthly payment based on your earnings—sometimes as low as $0—while keeping your loan in good standing and counting toward forgiveness.
To help you quickly identify which option might fit your needs, the table below outlines the fundamental differences between deferment and forbearance. While both stop your monthly bills, the financial impact varies significantly based on your loan type.
Source: StudentAid.gov
The cost of pausing payments is real. For example, pausing $30,000 in unsubsidized loans at 6.53% interest for 12 months adds approximately $1,959 in interest to your balance. If you qualify for deferment on subsidized loans, however, you would owe $0 in additional interest for that same period. Choosing the right option can save you nearly $2,000 in just one year.
Use this comparison as a starting point. If you have subsidized loans, deferment is almost always the superior financial choice. If you have only unsubsidized or PLUS loans, the interest cost is similar for both options, so your decision will depend on eligibility and duration limits.
Student loan deferment is a specific, authorized period during which you are not required to make loan payments. It is distinct because, for certain loan types, the federal government covers the interest charges on your behalf while the payments are paused. This feature makes deferment the gold standard for payment relief if you are eligible.
Mechanically, deferment works by freezing your repayment obligation without triggering negative consequences like delinquency or default. You must request it from your loan servicer and typically provide proof that you meet the criteria. Once approved, your billing statements stop for the designated period.
The most critical aspect of deferment is how it treats interest based on the type of loan you hold. According to StudentAid.gov, the government pays the interest during deferment for:
If you have these loans, your balance will be exactly the same at the end of the deferment as it was at the start. However, for Direct Unsubsidized Loans, Direct PLUS Loans (for parents or graduate students), and Unsubsidized Stafford Loans, you remain responsible for all interest that accrues. If you do not pay this interest during the deferment period, it may be capitalized (added to your principal balance) when repayment resumes.
Because of the potential interest subsidy, you should always investigate your eligibility for deferment before considering other options. It effectively hits “pause” on your debt without the penalty of ballooning balances for subsidized loans. For a broader look at how these loan types function, you can review our federal student loans overview.
Deferment is not automatic; you must qualify for one of the specific categories established by the Department of Education. Each type addresses a particular life phase or challenge, and they come with different time limits.
According to StudentAid.gov, the primary types of deferment available to federal borrowers include:
Documentation is key for all these categories. You will likely need to submit forms certified by an authorized official (like a doctor, commanding officer, or school registrar) to prove your status.
Student loan forbearance is a temporary postponement or reduction of your student loan payments granted by your loan servicer. While it provides immediate cash flow relief similar to deferment, there is a fundamental financial difference: interest accrues on ALL loan types during forbearance, including subsidized loans.
Forbearance is generally easier to obtain than deferment because it covers a broader range of financial difficulties. It acts as a bridge during tough times when you don’t fit into the strict boxes required for deferment. According to StudentAid.gov, there are two main categories of forbearance:
It is crucial to understand the cost implication here. Because the government never covers interest during forbearance, your loan balance will grow every single day payments are paused. At the end of the forbearance period, any unpaid interest is typically capitalized. This means a borrower with subsidized loans who chooses forbearance over deferment is voluntarily accepting a higher cost of borrowing.
Forbearance is designed to be a safety net when other options aren’t available. Understanding the two categories helps you know what you can request and what you are entitled to.
You may request general forbearance if you are experiencing financial difficulties that make making payments a struggle. Common reasons include:
According to StudentAid.gov, general forbearance is typically granted for no more than 12 months at a time, with a cumulative limit of 3 years on Direct Loans and FFEL Program loans.
Your servicer is required to grant forbearance in specific situations, provided you submit the proper documentation. According to StudentAid.gov, you are eligible for mandatory forbearance if you are:
The decision to pause payments should never be made without calculating the cost. The mechanics of interest accrual and capitalization can turn a short-term break into a long-term burden.
When you are in forbearance (or deferment on unsubsidized loans), interest continues to accumulate daily. If you do not pay this interest as it accrues, it remains “unpaid interest.” When your payment pause ends, this unpaid interest is often capitalized—added to your principal balance. From that day forward, you pay interest on the original loan amount plus the interest that accumulated during the break.
Let’s look at the numbers. Imagine you have $35,000 in student loans with an interest rate of 6.53% (a typical rate for recent undergraduate loans). You need to pause payments for 12 months.
If that $2,286 is capitalized, your new principal balance becomes $37,286. You will now be charged interest on this higher amount for the remaining life of the loan. Over a standard 10-year repayment term, that capitalization could cost you hundreds of additional dollars on top of the $2,286 you already added.
According to Sandy Baum, a higher education economist, “Borrowing is not inherently bad; the question is how much, and under what terms.” Understanding these terms allows you to mitigate damage. If you must use forbearance, consider making interest-only payments during the pause. This prevents the balance from growing and avoids the compounding effect of capitalization.
Applying for a payment pause is a straightforward process, but it requires attention to detail to ensure your request is approved quickly.
Your loan servicer is the company that handles your billing. If you aren’t sure who your servicer is, log in to your dashboard at StudentAid.gov to find out. You will submit your request directly to them.
For Deferment:
For Forbearance:
This is the most critical step. Do not stop making payments until you receive written confirmation that your deferment or forbearance has been approved. Stopping early can lead to delinquency, late fees, and negative marks on your credit report.
With the rules and costs in mind, you can use this simple framework to decide the best path for your specific situation.
Always start here. Ask yourself: Do I meet the criteria for unemployment, economic hardship, or in-school deferment? If yes, this is likely your best option, especially if you have subsidized loans. The interest savings are too valuable to pass up.
Log into your account and see if your loans are “Subsidized” or “Unsubsidized.”
How long will you need relief? If you need a pause for several years (e.g., returning to school or long-term unemployment), deferment offers longer cumulative limits (up to 3 years for some types). General forbearance is capped at 12 months at a time.
If you can afford to pay something, or if your hardship is likely to last a long time, a payment pause might be the wrong tool. An income-driven repayment (IDR) plan could lower your payment to a manageable amount based on your income, keeping you on track for forgiveness.
Pausing your payments can have a significant ripple effect if you are pursuing loan forgiveness programs. It is essential to understand how these months of non-payment are counted—or not counted.
Public Service Loan Forgiveness (PSLF): According to StudentAid.gov, time spent in deferment or forbearance generally does not count toward the 120 qualifying payments required for PSLF. Pausing payments simply delays your forgiveness date. However, there are exceptions: for example, the specific cancer treatment deferment and military service deferment may count. For most borrowers, switching to an IDR plan is superior because a $0 monthly payment on an IDR plan does count as a qualifying payment.
IDR Forgiveness: Similar to PSLF, months spent in forbearance generally do not count toward the 20 or 25 years needed for IDR forgiveness. While one-time account adjustments have given credit for past forbearance in recent years, moving forward, you should assume that pausing payments pauses your progress toward forgiveness.
Teacher Loan Forgiveness: Interestingly, you may be able to use forbearance while completing your five years of teaching service without resetting the clock, provided you complete the service requirement. Always verify this with your servicer.
Regarding your credit score, neither deferment nor forbearance is reported negatively. Your loans will appear as “current” on your credit report, which preserves your creditworthiness for other financial needs. See our PSLF guide for more details on maintaining eligibility.
Navigating these options can be tricky. Here are the most common pitfalls borrowers encounter so you can avoid them:
Before you commit to pausing payments, consider if there is a way to lower them instead. Keeping your loans in repayment status is almost always better for your financial health.
Income-Driven Repayment (IDR): These plans cap your payments at a percentage of your discretionary income. If you have no income, your payment could be $0. Crucially, these $0 “payments” keep you in good standing and count toward forgiveness timelines. For ongoing hardship, IDR is superior to forbearance.
Refinancing: If you have private student loans or high-interest federal loans and strong credit (or a cosigner), refinancing might lower your interest rate and monthly payment. However, be careful: refinancing federal loans turns them into private loans, causing you to lose access to federal deferment, forbearance, and forgiveness options.
According to Betsy Mayotte, a student loan expert, “In general, federal loans should be your first stop, but private loans can be appropriate when you’ve maxed out your federal eligibility.” This logic applies to managing debt as well—exhaust your federal flexibility (like IDR) before seeking external solutions like refinancing.
For more on these strategies, explore our guide to student loan refinancing.
Can I switch from forbearance to deferment? Yes. If your circumstances change and you become eligible for deferment (e.g., you lose your job after being in forbearance), you can apply for deferment. Contact your servicer to make the switch and save on interest.
Does forbearance or deferment hurt my credit score? No. As long as you apply and are approved before you miss a payment, your loans are reported as “current.” It does not leave a negative mark like a default or delinquency would.
Can I make payments during a pause? Absolutely. You are encouraged to make payments of any amount during deferment or forbearance. Paying even a small amount reduces the interest that will be capitalized later.
How many times can I request forbearance? According to StudentAid.gov, general forbearance is typically granted for 12 months at a time, with a cumulative limit of 3 years on most federal loans. Mandatory forbearance is renewed annually but can continue as long as you meet eligibility criteria.
Do private student loans have forbearance? Policies vary by lender. Many offer short-term forbearance for economic hardship (often 3-12 months total over the life of the loan), but they are not required to do so by law. You must ask your lender specifically.
Financial setbacks are often temporary, and the federal student loan system offers robust tools to help you bridge the gap. By choosing the right option, you can protect your credit and your wallet.
Your next steps:
Many or all of the products presented on this page are from sponsors or partners who pay us. This compensation may influence which products we include, as well as how, where, and in what order a product appears on the page.