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Student loan deferment and forbearance explained

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How and when to put your student loans on hold.

Even when the job market is strong, student debt loads are high enough to make it difficult for many people to afford student loans. It’s especially true if you’re in a situation where your finances aren’t as strong as they could be.

Lucky for you, most student loans come with a break: deferment or forbearance. We walk you through what you need to know about these two options to help you decide if either are right for you.

How do student loan deferment and forbearance work?

Deferment and forbearance allow you to postpone your student loan payments for a few months to a few years. Both are available for federal student loans and some private loans.

Interest capitalization

In most cases, your interest rate will continue to add up while you’re in deferment or forbearance. After it’s over, your lender will add the total amount of interest that’s accrued during your loan to your principal. This is called interest capitalization and it can make your loan more expensive because your loan will start gaining interest on a larger principal.

Your monthly repayments won’t necessarily go up, however — especially if you have federal loans. With federal loans and some private loans, you can revise your repayment plan to extend your loan term while you’re in forbearance or deferment to make sure that you can afford the amount you’re on the hook for.

There are a few exceptions to this: Federal Perkins loans never undergo interest capitalization. You also might not gain interest at all during deferment if you are on active military duty or if you’re ready to make payments before your grace period ends with a direct subsidized federal loan.

Qualifying for deferment or forbearance

With some types of deferment or forbearance, you need to prove you’re in a situation where you can’t afford your payments — you just lost a job, went back to school or have lots of unexpected medical expenses. Others allow you to qualify without giving a reason, as long as you’ve made a certain number of payments on time.

Deferment vs forbearance

While deferment and forbearance have a similar purpose, that’s where the difference typically ends. Here’s how they actually work:

DefermentForbearance
What types of loans qualify?Federal loans, some private loans in extreme circumstancesFederal loans, some private loans
What happens to your interest?Interest won’t add up on subsidized and Perkins federal loans, but continues to add up for other types of federal loans and private student loansInterest continues to add up
Do you need to make payments on interest?No, though it’s sometimes an optionYes
When is it useful?
  • During your grace period
  • You’re in school at least half-time
  • You’ve suffered an injury and need rehabilitation
  • You’re in an approved graduate fellowship program
  • You can’t find a full-time job
  • You’re suffering another extreme financial hardship
  • You joined the Peace Corps
  • You’re on active duty in the US military
  • You were on active duty in the last 13 months
  • During a medical residency
  • Payments are higher than 20% of your monthly income for federal loans, over 40% for some private loans
  • You’re eligible for loan forgiveness
  • You’re participating in a national service program like AmeriCorps
  • You’re an active member of the national guard but not eligible for military deferment
  • Personal or family illness
  • Unemployment by choice (after having a child, for example)
How long does it last?VariesOne to three-month increments up to a few years

Interested in refinancing? Compare your options now

Deferment in depth

Student loan deferment is when you put your loan repayments on hold, including interest. It’s typically only an option with federal student loans, though many private lenders offer deferment while you’re still in school and in extreme situations like deployment to a war zone.

You don’t typically have to request deferment while you’re still in school and during your six-month grace period after you drop below half time. After that, however, you’ll have to reach out to your lender or loan servicer to request deferment.

Deferment options for private student loans vary — usually you can defer your loan for around three months at a time after you’ve made on-time repayments. It also usually comes with a maximum amount of time you can defer your loans, typically between 12 and 36 months.

Federal student loans come with multiple deferment options, which we outline in the table below. Generally, interest continues to add up with a few exceptions: If you have a federal Perkins loan, before you start making repayments on your subsidized direct loan or in most cases during active military duty.

Types of federal student loan deferment

OptionEligibilityHow long it lastsDoes my interest capitalize?
In-school deferment
  • Full-time student at an eligible school
  • Half-time at an eligible school with a direct loan or a Perkins loan
  • Half-time at an eligible school with a FFEL Program loan that was disbursed after July 1, 1987
  • While you’re in school
  • Six months after you leave school if you’re a Perkins borrower
  • Yes, except for Perkins borrowers
  • Subsidized loans don’t gain interest during the grace period before repayment begins
Graduate fellowship deferment
  • Have a bachelor’s degree
  • Be accepted to a full-time graduate fellowship program that requires a written statement of objectives, periodic reports or projects to track your progress and accepts credits from foreign universities
  • Have an authorized official certify that your program is eligible if it’s not in the US
  • The length of your program
  • Six months after you leave your program if you have a Perkins loan
Yes, except for Perkins borrowers
Rehabilitation training program deferment
  • Attend a program licensed, certified, approved or recognized by a state agency
  • Attend a program that has a written plan and specific end date and provides you personally with rehabilitation services
  • Be prevented from working at least 30 hours a week for at least three months
  • The length of your rehab program
  • Six months after you leave your program if you have a Perkins loan
Yes, except for Perkins borrowers
Unemployment defermentEither:

  • Receive unemployment benefits
  • Unable to find a full-time job after making at least 6 attempts to find a job in the past six months
  • Rejected job offers because you were overqualified and are a Perkins loan borrower
  • Registered with a private or public employee agency within 50 miles of your address
  • Six months at a time, up to a total 36 months
  • Perkins borrowers can qualify for an additional six months after they no longer qualify
Yes, except for Perkins borrowers
Economic hardship defermentThe main requirements are you must work full-time and meet the poverty requirements provided in the application. You’ll have to attach additional documentation if you:

  • Receive benefits from a public assistance program like SNAP or SSI
  • Serve as a Peace Corps volunteer
  • Have already been approved for economic hardship deferment for another federal loan
  • Up to 36 months per loan. Deferment is granted by the year, unless you’re a Peace Corps volunteer
  • Perkins borrowers get an additional six months
Yes, except for Perkins borrowers
Military service and post-active duty student defermentYou must either be:

  • A reserve or retired member called to active duty
  • A full-time member of the National Guard called to active duty by the President or Secretary of Defense (military service deferment only) or by the governor (post-active duty deferment only)
  • Reassigned duty stations

The active duty must involve either a:

  • War
  • National emergency
  • Contingency operation
  • Military service deferment ends 180 days after military service ends
  • Post-active duty deferment ends no more than 13 months after your qualifying military service ends
Yes, except for Perkins, subsidized direct and FFEL Program borrowers. You also might qualify for no interest accrual for active duty members if you have a Direct unsubsidized loan.
Parent PLUS borrower defermentGenerally, parents must have a direct or federal PLUS loan in their name disbursed after June 30, 2008 and students must either be enrolled more than half-time within the past six monthsSix months after the student drops below half-timeYes

Step-by-step instructions to fill out student loan deferment forms

Forbearance in depth

Student loan forbearance is when you pause loan repayments on your principle but not on interest. In other words, you’ll still have to make repayments, they’ll just be much smaller. Since it still requires repayment, it’s generally an option that borrowers turn to after they make sure they can’t qualify for deferment.

Private loans

With private student loans, you can usually qualify for a total of between 12 and 36 months of forbearance in one- to three-month increments, depending on your lender. Like with deferment, you might have to prove financial or personal hardship and make at least one or two years of on-time repayments to qualify. To apply, reach out to your lender or loan servicer to ask about the application process. Usually, it involves a one- or two-page form that takes a few minutes to complete.

Federal loans

With federal student loans, forbearance is a bit more complicated. That’s mainly because there are two different types of forbearance: mandatory and general forbearance.

Mandatory forbearance

Mandatory forbearance doesn’t mean that you’re automatically enrolled in forbearance if you qualify: You still have to apply. The difference is that your servicer is required to grant your request. You can qualify for mandatory forbearance if you’re:

  • In a medical or dental residency program.
  • Have payments worth more than 20% of your monthly income.
  • Are serving in AmeriCorps and received a national service reward.
  • On track for teacher loan forgiveness.
  • A member of the National Guard on active duty ordered by the governor.
  • Qualify for partial repayment under the US Department of Defense Student Loan Repayment Program.

You can only get up to 12 months of mandatory forbearance at a time. If you still need forbearance after that time, you can apply for more.

General forbearance

With general forbearance, you aren’t guaranteed to qualify. Requirements might vary by servicer, but typically you can apply for general forbearance when you’re:

  • Experiencing financial difficulty.
  • Paying off medical bills.
  • Switching jobs

You can qualify for forbearance of up to 12 months at a time if you have a direct loan, FFEL loan or Perkins loan. With Perkins loans, you’re limited to a total of 36 months. Other loans might have limits to how much time they can request, set by the loan servicer.

Will pausing student loan repayments hurt my credit?

No. In fact, it can preemptively help your credit by helping you avoid missing repayments. Your payment history makes up the largest percentage of your FICO credit score — the most commonly used credit scoring system — so missing repayments can cause that number to seriously drop.

A lower credit score means that you’ll have a hard time qualifying for good rates with other types of credit. Missing student loan repayments can make it difficult to buy a new car, a new home or even qualify for a credit card with a decent interest rate.

There is one case where deferment or forbearance might hurt your credit score: When your financial need lasts longer than you’re able to pause repayments. Not only will you have to start making repayments before you can afford them, you’ll be on the hook for money than you would have been, thanks to interest capitalization. If you don’t get a modified repayment plan after pausing your loan — as is the case with most private loans — you’ll make higher monthly repayments and be at risk of default.

Should I pause my student loan repayments?

It might be a good idea if…

  • You’re facing a temporary financial setback
  • You’re going back to school
  • You’ve been injured
  • You’re going on active military duty
  • You’re eligible for federal forgiveness programs

It might not be a good idea if…

  • There’s no foreseeable end to your financial situation
  • You want to pay off your loans as fast as possible
  • You want to keep the cost of your loan down as much as possible

3 questions to ask yourself before you apply

  • How long will I need to put my loans on hold?
    Estimate how much time you’ll need to get your finances back together. That way, you’ll have an idea of how much time to ask for. If you need more time than your lender offers, you might want to consider looking into some alternatives.
  • Do I qualify for the options my lender offers?
    Federal and private loans come with different requirements for requesting deferral or forbearance. With most private lenders, you’ll typically need to make between one and three years of on-time repayments before you can apply. Some also require proof of hardship.
  • Can I just cut back on spending?
    Sometimes holding off on your loans feels like the easiest way to deal with a small financial crisis with minimal changes to your spending habits. But if it’s an option, you might want to consider sticking to a tighter budget to avoid making your loan more expensive. This is especially true if your deferment option doesn’t lengthen your term — a larger balance means higher repayments.

How to request deferment or forbearance

Requesting deferment or forbearance depends on your servicer or lender. Generally you need to:

  1. Reach out to your servicer or provider and ask about the options you’re eligible for
  2. Fill out a short application
  3. Submit your application

If you’re applying for forbearance on a federal loan, you might want to talk to your servicer about reworking your repayment plan to make sure your monthly repayments don’t increase after your interest is capitalized. This can involve extending your loan term, signing up for a new type of repayment plan or both.

Alternatives to consider

If you decided that forbearance or deferment aren’t the right steps for you to take with your student loans, here are a few other alternatives to consider:

Income-based repayment plan

If you can’t see an end to your financial situation in the next few months or years, you might want to switch to an income-based repayment plan.

With federal loans, you can do this by reaching out to your loan servicer. With private loans, first reach out to your lender and explain your situation. If it’s really not an option, you might have to refinance your student loan with a lender that offers that option.

Graduated repayment plan

If you think your salary will improve over time, you might want to sign up for a graduated repayment plan instead of applying for forbearance or deferment. These start with low payments that increase every two years, regardless of your income. They’re available for federal loans and some private lenders offer similar options.

Refinance or consolidate

Take out a new loan with more favorable terms and repayment options to pay off your current student debt. This is typically a better option for private loans: You stand to lose several benefits that only federal loans offer and might not be able to find better terms than what you already have.

Top refinancing providers to compare

Rates last updated June 18th, 2018
Name Product Min. Credit Score Max. Loan Amount APR Product Description
SoFi Student Loan Refinancing Variable Rate (with Autopay)
Good to excellent credit
full balance of your qualified education loans
2.63%–7.695% (variable)
A leader in student loan refinancing, SoFi can help you refinance your loans and pay them off sooner.
LendKey Student Loan Refinancing (with AutoPay)
660
$300,000
2.58%–18% (variable)
Find competitive rates and unmatched loan benefits from LendKey’s network of not-for-profit lenders.
Education Loan Finance Student Loan Refinancing
Good to excellent credit
None
3.09%–6.69% (fixed)
Lower your student debt costs with manageable payments, affordable rates and flexible terms.
EDvestinU Consolidation & Refinancing Program
700
$200,000
3.85%–7.45% (variable)
Earnest Student Loan Refinancing Variable Rate (w/ autopay)
650
no maximum
2.57%–5.87% (variable)
Get a tailored interest rate and repayment plan with no hidden fees.
LendingTree Student Loans
Good to excellent credit
Varies by lender
2.55%–9.75% (fixed)
Compare multiple student loans and student loan refinancing options in one place.
Purefy Student Loan Refinancing
620
$90,000
2.00%–7.98% (variable)
Refinance all types of student loans — including federal and parent PLUS loans.
Credible Student Loan Refinancing
Good to excellent credit
None
2.57%(As low as ) (variable)
Get prequalified offers from top student loan refinancing providers in one place.

Compare up to 4 providers

Bottom line

Deferment and forbearance are like bandaids: They’re temporary fixes for temporary problems. If you’re unable to make your student loan repayments for a short period of time, these options can be a lifesaver, helping you avoid missing payments or even going into default.

But don’t use these bandaids for a bullet wound. Deferment and forbearance aren’t going to help you if you’re experiencing long-term problems. Applying for forbearance or deferment will also make it take longer for you to pay off your student loans and increase how much you pay in interest.

Want to learn more about student loans? Read our guide to find out how they work and compare lenders.

Frequently asked questions

Anna Serio

Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.

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