Deferment vs Forbearance for Student Loans: What to Do If You Can't Pay

Your monthly student loan payment feels impossible. Your paycheck doesn't stretch far enough. You're not alone in this struggle.

U.S. student loan debt reached $1.61 trillion in 2024, affecting 42.2 million borrowers, many struggling to repay their loans. Before the pandemic, 18% of federal borrowers were delinquent or in default. The stress is real, but so are your options.

Not knowing whether to choose deferment or forbearance can cost you hundreds or even thousands of dollars in the long run. The wrong choice could leave you paying interest you didn't need to pay, or missing out on protection that could save your financial future.

In this guide, you'll learn the difference between deferment vs forbearance for student loans, how deferment affects interest, the pros and cons of forbearance, and what to do if you can't pay. We'll also cover safer alternatives and the exact steps to take today to protect yourself from default while minimizing your costs.

Understanding Student Loans

Student loans are money borrowed to pay for education that must be repaid with interest. Understanding key terms helps you make better decisions about relief options.

Principal is the original amount you borrowed. Interest is the cost of borrowing that money, calculated as a percentage of your principal balance. Capitalization happens when unpaid interest gets added to your principal balance, meaning you'll pay interest on interest.

Federal loans offer stronger protections than private loans. Federal student loans comprise 92% of U.S. student debt, offering protections like deferment that aren't available with private loans. If you have federal loans, you have more options when you can't pay.

There are four main types of federal student loans: Direct Subsidized, Unsubsidized, PLUS, and Consolidation loans. Subsidized loans are the most borrower-friendly because the government pays interest while you're in school and during certain periods of relief.

Sources:

• https://www.federalreserve.gov/releases/g19/current/
• https://studentaid.gov/understand-aid/types/loans

Deferment vs Forbearance for Student Loans: How They Work

Both deferment and forbearance let you pause or reduce your student loan payments temporarily. The key difference lies in how interest is handled during the pause.

Deferment is a temporary postponement of your federal student loan payments for specific qualifying events. Common reasons include half-time enrollment in school, unemployment, or economic hardship. You must meet strict eligibility requirements and provide documentation.

Forbearance allows temporary payment reduction or pause when you're experiencing financial hardship, illness, or a change in employment. It's easier to qualify for than deferment but offers less protection against interest costs.

The most important difference: Interest may not accrue on certain subsidized loans during deferment, but interest accrues on all loans during forbearance. This single factor can save or cost you thousands of dollars over the life of your loans.

Sources:

• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment
• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance
• https://www.experian.com/blogs/ask-experian/student-loan-deferment-vs-forbearance/

Deferment of Student Loans

Deferment eligibility depends on your situation. You might qualify if you're enrolled at least half-time in school, unemployed and actively seeking work, or experiencing economic hardship. You'll need to apply through your loan servicer with proper documentation.

The biggest benefit of deferment applies to subsidized federal loans and Perkins loans. The government covers interest during deferment periods, so your balance won't grow. This protection can save you significant money if you qualify.

However, deferment isn't perfect. Unsubsidized loans still accrue interest during deferment. You'll need to meet documentation requirements, and there are time limits depending on your deferment type. Some deferments have lifetime limits you need to track.

Sources:

• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment
• https://www.nerdwallet.com/student-loans/learn/student-loan-deferment-forbearance

How Deferment Affects Interest

Understanding how deferment affects interest is crucial for making the right choice. The rules differ based on your loan type.

For subsidized Direct Loans and Perkins loans, interest does not accrue during most types of deferment. The government pays the interest for you. Your loan balance stays the same, which means your monthly payments after deferment will be the same as before.

For unsubsidized federal loans, interest accrues daily during deferment. This interest gets added to your principal balance when deferment ends, a process called capitalization. Your new monthly payment will be higher because you'll be paying interest on the higher balance.

Here's a money-saving tip: If you can afford it, consider paying just the interest during deferment to avoid capitalization. Even small payments toward interest can prevent your balance from growing and keep your future payments manageable.

Sources:

• https://www.experian.com/blogs/ask-experian/student-loan-deferment-vs-forbearance/
• https://studentaid.gov/help-center/answers/article/difference-between-deferment-and-forbearance

What to Do If Deferment Isn't an Option

If you don't qualify for deferment, you still have immediate alternatives. Request forbearance from your servicer or ask about switching to an income-driven repayment plan if you're eligible.

Consider whether you need short-term or long-term relief. If your income drop is temporary (like a brief job loss), forbearance might work. If you expect ongoing affordability issues, income-driven repayment could be a better long-term solution.

Don't wait until you miss payments to explore these options. Contact your servicer as soon as you know you'll have trouble paying. Early action gives you more choices and better outcomes.

Sources:

• https://www.nerdwallet.com/student-loans/learn/student-loan-deferment-forbearance

Forbearance of Student Loans

Forbearance provides temporary payment relief when you don't meet deferment criteria. It's more flexible but comes with higher costs due to interest accrual.

Forbearance is typically granted for up to 12 months at a time, though you may be able to renew it. Your servicer has discretion in granting forbearance, and you may need to provide documentation depending on your situation.

The critical difference from deferment: Interest accrues on all federal loans during forbearance and may capitalize if left unpaid. This means your loan balance will grow during forbearance, potentially making your future payments higher.

Sources:

• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance
• https://www.experian.com/blogs/ask-experian/student-loan-deferment-vs-forbearance/

Pros and Cons of Forbearance

Understanding the pros and cons of forbearance helps you decide if it's right for your situation.

Pros of forbearance:

• Easier to qualify for than deferment
• Provides fast short-term relief when you need it most
• Helps you avoid delinquency and default on your credit report
• Can buy you time to find better long-term solutions

Cons of forbearance:

• Interest accrues on all loans, including subsidized ones
• Capitalization increases your total debt when forbearance ends
• Risk of relying on repeated forbearance instead of addressing underlying affordability issues
• Your monthly payments may be higher after forbearance ends

Forbearance makes sense for one-time emergencies like medical bills or temporary job loss. It's less suitable for ongoing affordability issues that need permanent solutions like income-driven repayment.

Sources:

• https://www.nerdwallet.com/student-loans/learn/student-loan-deferment-forbearance
• https://www.experian.com/blogs/ask-experian/student-loan-deferment-vs-forbearance/

Deferment vs Forbearance for Student Loans: Making the Right Choice

Your decision should be based on your loan types, expected hardship duration, interest costs, and long-term financial goals.

Use this simple decision framework:

Choose deferment if:

• You qualify for deferment and have subsidized loans
• You want to avoid interest accrual during your payment pause
• You meet the strict eligibility requirements and can provide documentation

Consider forbearance if:

• You need broad, short-term relief but don't qualify for deferment
• Your financial hardship is temporary and you can resume payments soon
• You're willing to accept interest costs for faster relief

Explore income-driven repayment instead if:

• You have ongoing affordability problems that won't resolve quickly
• You want to avoid repeated use of forbearance or deferment
• You prefer a permanent solution with potentially lower monthly payments

Here are two real-world examples:

Recent graduate with subsidized loans and unemployment: Choose deferment to prevent interest growth while you job search. The government will cover interest on your subsidized loans, keeping your balance stable.

Mid-career borrower on medical leave with unsubsidized loans: Consider brief forbearance while paying accrued interest if possible. This prevents capitalization while giving you payment relief during recovery.

Sources:

• https://studentaid.gov/help-center/answers/article/difference-between-deferment-and-forbearance
• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment
• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance

What to Do If You Can't Pay Student Loans: Deferment & Forbearance Options

If you're struggling with payments, follow these steps to protect yourself and minimize costs.

Step 1: Call your servicer early, before you miss a payment. Ask about deferment eligibility and what documentation you'll need. Early contact shows good faith and gives you more options.

Step 2: If you don't qualify for deferment, request forbearance. Ask specifically how interest will be handled and whether you can make interest-only payments during the forbearance period.

Step 3: Compare forbearance with income-driven repayment plans. IDR might reduce your payments sustainably without the interest costs of forbearance. Ask your servicer to calculate payments under different IDR options.

Step 4: Consider making interest-only payments during any payment pause. This prevents interest capitalization and keeps your total costs down. Even small payments toward interest can save you money long-term.

Remember, these relief options are tools to help you get back on track, not permanent solutions. Use the breathing room to address underlying financial issues or explore better repayment options.

Sources:

• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment
• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance
• https://studentaid.gov/manage-loans/repayment/plans/income-driven
• https://www.experian.com/blogs/ask-experian/student-loan-deferment-vs-forbearance/

Additional Solutions if You Can't Pay Your Student Loans

Beyond deferment and forbearance, other options might better fit your long-term needs.

Income-Driven Repayment (IDR) caps your payments at 10-20% of your discretionary income. After 20-25 years of qualifying payments, any remaining balance may be forgiven. Four IDR plans are available, each with different payment calculations and forgiveness timelines. You need to apply and recertify your income annually.

IDR can provide permanent affordability rather than temporary relief. If your income is low relative to your debt, your payments might be lower than standard payments indefinitely.

Consolidation combines multiple federal loans into one Direct Consolidation Loan with a single monthly payment. This can simplify repayment and potentially make you eligible for certain repayment plans or forgiveness programs.

However, consolidation has trade-offs. Your new interest rate will be the weighted average of your existing rates, rounded up to the nearest eighth of a percent. You'll also restart the clock on IDR forgiveness timelines.

Forgiveness Programs may eventually eliminate some or all of your debt. IDR plans offer forgiveness after 20-25 years. Other federal programs like Public Service Loan Forgiveness might apply to your situation. Discuss all options with your servicer.

Sources:

• https://studentaid.gov/manage-loans/repayment/plans/income-driven
• https://studentaid.gov/manage-loans/consolidation

Common Questions About Deferment and Forbearance

Does interest accrue during deferment and forbearance?

Interest rules depend on your relief type and loan type. During deferment, interest does not accrue on subsidized Direct Loans and Perkins loans, but it does accrue on unsubsidized loans. During forbearance, interest accrues on all federal loans.

How long can deferment or forbearance last?

Duration varies by program and situation. Forbearance is often granted up to 12 months at a time, with possible renewals. Deferment length depends on your qualifying event. For example, unemployment deferment can last up to three years total, while in-school deferment continues as long as you're enrolled at least half-time.

Will deferment or forbearance affect my eligibility for other programs?

You can typically enter income-driven repayment or consolidate your loans after deferment or forbearance. However, timing matters for interest capitalization. Ask your servicer about the best sequence of actions for your situation.

Should I pay interest during a payment pause?

If you can afford it, paying accrued interest prevents capitalization and keeps your total costs down. Even partial interest payments help. This strategy is especially important during forbearance when interest accrues on all loans.

Sources:

• https://www.experian.com/blogs/ask-experian/student-loan-deferment-vs-forbearance/
• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance
• https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment
• https://studentaid.gov/manage-loans/repayment/plans/income-driven
• https://studentaid.gov/manage-loans/consolidation
• https://studentaid.gov/help-center/answers/article/difference-between-deferment-and-forbearance

Conclusion

You now understand the key differences in deferment vs forbearance for student loans, how deferment affects interest, and the pros and cons of forbearance. With 42.2 million borrowers managing $1.61 trillion in student debt, making the right choice between these relief options can meaningfully impact your long-term financial health.

Deferment offers better interest protection for subsidized loans but has stricter eligibility requirements. Forbearance provides easier access to payment relief but at the cost of interest accrual on all loans. Income-driven repayment might offer a better long-term solution than repeated use of either option.

The most important step is taking action before you miss payments. Early contact with your servicer opens more doors and protects your credit while you navigate financial difficulties.

Contact your loan servicer today to review your eligibility for deferment, forbearance, or income-driven repayment plans. Ask specifically how interest will be handled under each option so you can choose the safest, most affordable path forward for your situation.

Sources:

• https://studentaid.gov/articles/3-things-borrowers-should-know-about-pause-extended-through-jan-2025/