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Student loan deferment vs. forbearance
Which option is best for you depends on the type of loans you have and your reason for pausing repayments.
Student loan deferment vs. forbearance
|Best for when …||You have federal subsidized or Perkins Loans and temporarily can’t afford repayments.||You have private loans or don’t qualify for federal deferment.|
|What types of loans qualify?|
|What happens to your interest?||Aside from federal subsidized and Perkins Loans, interest continues to add up and capitalizes once repayments begin again.||Aside from Perkins Loans, interest continues to add up and capitalizes once repayments begin again.|
|How long does it last?||Between six and 36 months — it varies depending on your reason for deferment||Up to a few years — typically in one- to three-month increments|
When should I apply for deferment?
Deferment is generally only available if you have federal loans with two exceptions: Private loans often have an option to defer repayments while you’re in school or if you’re on active military duty. Some private lenders might also offer hardship deferment, though it’s rare.
You might want to consider deferment in the following situations:
- While you’re in school and during your grace period. Most federal loans automatically default to this type of deferment, though private and Parent PLUS Loan borrowers have to apply.
- You go back to school. As long as you’re enrolled at least half time, you can qualify for in-school deferment on your federal loans. The rare private lenders might also offer this as well.
- You’ve suffered an injury and need rehabilitation. You may be eligible for Rehabilitation Training Program Deferment on your federal loans.
- You’re diagnosed with cancer. The federal government recently launched a deferment program specifically for cancer patients.
- You’re in an approved graduate fellowship program. Graduate fellows with federal loans can also qualify for deferment even if you’re not enrolled in courses.
- You can’t find a full-time job. You can extend your grace period for up to three years on federal loans if you can’t find a full-time job or any job at all.
- You joined the Peace Corps. Peace Corps volunteers can qualify for economic hardship deferment, though AmeriCorps service members aren’t eligible.
- You’re on active duty in the US military. You can defer your federal loans and most private loans for the duration of most active military duty.
- You were on active duty in the last 13 months. Service members can also defer their loans while they’re settling back into civilian life after active duty.
- You’re suffering another extreme financial hardship. When other financial setbacks occur — like a divorce that wiped out your bank account — you might be able to qualify for deferment.
When should I apply for forbearance?
You might be eligible to apply for forbearance in the following situations:
- You’re temporarily unemployed. If you temporarily take time off from work — like after having a child — you might be able to qualify for federal forbearance. Most private lenders also offer hardship forbearance if you lose your job.
- You’re entering a medical residency. Medical residents can apply for forbearance on federal student loans and even some private loans.
- You temporarily owe more than you make. If your repayments are higher than 20% of your monthly income for federal loans, you might be eligible for forbearance. Some private lenders might also offer this option, though they typically have higher debt-to-income requirements to qualify.
- You’re participating in AmeriCorps. Federal loans have a special AmeriCorps forbearance program. You might also be able to meet some private lender’s economic hardship requirements if your income is low enough.
- You’re an active member of the US National Guard. If you’re not eligible for military deferment on your federal loans, you still might be able to get forbearance. You likely can’t pause private loan repayments, though.
- You or a family member are seriously ill. If you or a family member are facing a serious illness, you might be eligible for hardship forbearance on your federal and even private student loans.
When should I consider another option?
Deferment and forbearance aren’t always the best choice. You might want to consider switching repayment plans or refinancing with a cosigner in the following situations:
- You’re facing a long-term financial setback. Deferment and forbearance often run out after three years.
- You want to reduce your loan cost. Applying for deferment and forbearance actually increases your loan cost, especially if your interest capitalizes.
- You’re applying for Public Service Loan Forgiveness (PSLF). Putting your repayments on hold means it’ll take longer for you to qualify for PSLF. And if you choose to go into forbearance after you apply, it’ll make your loan more expensive if you get rejected.
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If you have federal subsidized loans and a choice between deferment or forbearance, you might want to opt for deferment since interest doesn’t capitalize while your repayments are on hold. But if you have private student loans, it doesn’t matter which you sign up for since both options will increase the overall cost of your loans.
You can learn more about how it all works with our guide to student loan deferment and forbearance.
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