If juggling your student loan payments feels like a tightrope walk, then tapping into deferment or forbearance options might just be your financial lifesaver, allowing you to hit pause without derailing your credit standing.
The crux? While federal forbearance means interest keeps ticking upward, deferment can sometimes freeze that clock, halting interest under specific loan types. At the end of the day, your choice boils down to eligibility — whichever path you’re qualified to take.
Snapshot: Deferment vs. Forbearance Highlights
- Federal Forbearance: Interest keeps piling up during the hold period.
- Deferment: Interest may stop accumulating if you hold Direct Subsidized or Perkins Loans.
- Qualifying triggers differ—both relate to temporary income dips or life circumstances.
- Deferment is a must-grant if you meet criteria; forbearance often depends on your loan servicer’s call.
- Forbearance typically lasts up to 12 months per stretch; deferment durations vary by type.
Unpacking the Distinction: What Sets Deferment and Forbearance Apart?
Both deferment and forbearance allow putting your student loan payments on ice temporarily, but their inner workings diverge in meaningful ways.
A big one: deferment demands a qualifying cause—think going back to school at least half-time or grappling with financial strain.
In contrast, forbearance usually kicks in when your income takes a nosedive. Your loan servicer often holds the cards on approval, except in certain mandatory instances, like active duty in the National Guard or AmeriCorps participation. Still, eligibility checks always rest with your servicer.
Crucially, interest stacking up during forbearance is a given. Besides Perkins Loans, accrued interest typically capitalizes—meaning it’s added to your loan balance, causing interest-on-interest to compound. Deferment sidesteps this for some loans; here, interest may pause, depending on your loan type.
Side-by-Side: Federal Student Loans—Deferment vs. Forbearance
| Duration | Varies by deferment category | Up to 3 years total, requested in 12-month increments |
| Qualification Criteria | Unemployment, cancer treatment, military service, economic hardship, and other scenarios |
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| Interest Behavior | Usually does not accrue on Direct Subsidized Loans, Perkins, subsidized portions of consolidation loans | Interest accumulates and capitalizes |
| Credit Impact | No negative effect on credit score but noted in loan history | Similar impact; specifics depend on servicer policies |
For private loans, deferment and forbearance options are a mixed bag. Not every servicer extends forbearance, but many provide it under certain conditions. Always check directly with your loan servicer for the ins and outs, because timelines, interest accrual, and eligibility vary widely.
Demystifying Student Loan Forbearance
Federal forbearance lets you put your student loan bills on hold for increments of up to 12 months, stacking up to a maximum of three straight years.
During forbearance, interest ticks upward relentlessly. When the hold period ends, unpaid interest gets folded into your principal—capitalization—making your balance balloon and fueling future interest calculations. Perkins Loans dodge this capitalization, though they still see interest accruing.
Types of forbearance you might encounter include:
- General Forbearance: Granted at the servicer’s discretion when you face financial challenges, job changes, medical bills, or other trials.
- Mandatory Forbearance: Applied when you qualify, such as medical/dental residency, AmeriCorps service, qualifying military programs, or paying more than 20% of your income on federal loans monthly.
If private loans are in the mix, forbearance availability and qualifications shift depending on the lender. Reach out to your servicer to explore your options.
Steps to Secure Student Loan Forbearance
Start by hunting down the correct forbearance application form—there’s one for each forbearance type, accepted across all servicers.
Your loan servicer will walk you through the process and may spotlight other payment plans worth considering. Touch base with them to kick things off.
Crucially, keep up your payments until your servicer officially greenlights your forbearance. Stopping payments prematurely risks delinquency, which can slam the brakes on your application.
For private loans, contact your lender directly. Each servicer’s application steps differ, often requiring proof of financial hardship.
The Scoop on Student Loan Deferment
Deferment freezes your payments too, but often brings extra perks to the table compared to forbearance.
Generally, deferment can last longer than forbearance, and interest accumulation pauses on certain loans—think Direct Subsidized, Perkins, and subsidized portions of several consolidation loans. However, other federal loans still gather interest during deferment.
Qualifying circumstances include:
- Receiving cancer treatment
- Living below 150% of your state’s poverty level or depending on welfare
- Service in the Peace Corps
- Enrollment at least half-time in an undergrad or grad program
- Active or post-active military duty
- Direct PLUS Loan parents with children enrolled at least half-time
- Participation in an approved rehab training program
- Unemployment with difficulty finding full-time work
Private loan deferment options vary significantly—many servicers offer it for returning to school half-time or more. Always check in with your lender to see what they’ll allow.
How to Pursue Student Loan Deferment
For federal loans, reach out to your servicer or use the appropriate deferment application form. As with forbearance, keep sending payments until your deferment status is confirmed.
If you have private loans, ask your lender directly about deferment possibilities and requirements.
Which Path Fits Your Wallet Best?
If you tick the boxes for deferment, it’s often the smarter route: longer payment breaks, and typically no interest pile-up on subsidized or Perkins loans. When deferment’s out of reach and cash is tight, forbearance can serve as a backup lifeline.
Before diving in, confirm your eligibility closely. Neither option is open if your loan is already delinquent or in default. Maintaining a solid credit profile can pave the way to snagging better interest rates, which shrink monthly bills.
Another angle: stretching out your loan term lowers monthly sums but hikes total interest paid over the long run.
While refinancing might look tempting for private loans, federal loan holders beware—it converts your loan to private status, wiping out key borrower protections like income-driven repayment plans and loan forgiveness opportunities.
To boost your budget, consider bigger lifestyle tweaks: downsizing your apartment or picking up a side hustle to fatten your wallet.
In Conclusion
Both deferment and forbearance offer borrowers a breather from monthly student loan payments. When available, deferment edges out forbearance with its added benefits. If deferment isn’t an option, forbearance steps in as a temporary shield.
Remember, these are stopgap measures—not permanent fixes. Finding sustainable ways to juggle your student debt remains crucial to long-term financial health.
