When you can’t make student loan payments, you have two federally protected options to pause them: deferment and forbearance. Both stop the requirement to pay, but one is almost always better than the other — and which one you choose can cost (or save) thousands of dollars in capitalized interest.
Deferment vs. Forbearance: Side-by-Side
| Feature | Deferment | Forbearance |
|---|---|---|
| Payments paused? | ✅ Yes | ✅ Yes |
| Interest on subsidized loans? | ❌ Government pays | ✅ Accrues |
| Interest on unsubsidized loans? | ✅ Accrues | ✅ Accrues |
| Counts toward PSLF/IDR? | ❌ No (most types) | ❌ No (most types) |
| Application required? | Yes | Yes (general) / Automatic (mandatory) |
| Duration limit? | Varies by type | 12 months at a time |
| When to use | Qualifying life circumstances | Last resort when deferment doesn’t apply |
Bottom line: Deferment is better — especially for subsidized loan holders where the government absorbs the interest cost. Always pursue deferment before forbearance.
Types of Federal Deferment
| Deferment Type | Qualifications | Max Duration |
|---|---|---|
| In-school deferment | Enrolled at least half-time at eligible school | As long as enrolled |
| Graduate fellowship | Enrolled in approved fellowship program | Duration of fellowship |
| Rehabilitation training | Enrolled in approved rehabilitation program | Duration of program |
| Unemployment | Seeking employment; receiving unemployment benefits | Up to 3 years |
| Economic hardship | Receiving federal/state assistance; income below 150% poverty line; Peace Corps service | Up to 3 years |
| Military service | Active duty or qualifying National Guard activation | Duration of service + 13 months |
| Cancer treatment | During treatment and 6 months after | Duration + 6 months |
Types of Forbearance
General Forbearance (Discretionary)
Your servicer can grant general forbearance at their discretion for:
- Financial hardship
- Medical expenses
- Change in employment
- Other reasons acceptable to the servicer
Duration: Up to 12 months; can be renewed (no absolute limit, but servicers may limit total time).
Mandatory Forbearance
Your servicer must grant these if you qualify:
| Type | When You Qualify |
|---|---|
| AmeriCorps service | Serving in national service position |
| Internship/residency | Enrolled in medical/dental internship or residency |
| Student loan debt burden | Monthly payment ≥ 20% of gross monthly income |
| Department of Defense teacher loan repayment | Participating in DoD program |
| National Guard duty | Activated by governor, not eligible for military deferment |
| Teacher Loan Forgiveness | Pursuing TLF program |
Administrative Forbearance
Granted by the Department of Education during declared disasters, the COVID payment pause (ended 2023), and SAVE litigation (ongoing 2026). Borrowers on SAVE are currently in interest-free administrative forbearance.
Interest Capitalization: The Hidden Cost
When deferment or forbearance ends, any unpaid accrued interest capitalizes (is added to your principal balance). This increases the amount you owe and means future interest accrues on a larger balance.
Example:
- $40,000 balance at 6.5% on unsubsidized loans
- 12 months of forbearance
- Accrued interest: $40,000 × 6.5% = $2,600
- New principal after capitalization: $42,600
- You now pay interest on $42,600 instead of $40,000 — permanently
To minimize capitalization: Pay the accruing interest monthly even while payments are paused. This keeps your principal from growing.
When to Use IDR Instead
If you’re pausing payments due to low income, income-driven repayment is almost always better than forbearance:
- IDR payments can be $0/month if your income is low enough
- $0 IDR payments still count toward PSLF and IDR forgiveness
- $0 IDR payments do not capitalize interest (under SAVE; partial subsidy under IBR)
- Forbearance months count toward nothing
Before requesting forbearance: Apply for an IDR plan at StudentAid.gov. If your payment would be $0 or very low, you get the pause benefits without losing credit toward forgiveness.
How to Request Deferment or Forbearance
- Contact your loan servicer (find them at StudentAid.gov → “My Aid” → “Loan Servicer”)
- Submit the appropriate form (available on servicer’s website or StudentAid.gov)
- Include required documentation (unemployment notice, military orders, enrollment verification, etc.)
- Servicer processes request — typically 2–4 weeks
- Continue making payments until approval is confirmed
Do not simply stop paying — servicers must process the request before pausing payments, and missed payments hurt your credit and count toward delinquency.
Private Student Loans and Deferment/Forbearance
Federal protections don’t apply to private loans. Private lenders offer deferment and forbearance at their discretion:
- Most lenders offer 12–24 months of forbearance total over the life of the loan
- Interest typically accrues on private loans during all pause periods
- Contact your private lender directly for options; policies vary widely
Related Guides
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy