When you cannot make your student loan payments, two options let you temporarily pause them without going into default: deferment and forbearance. Both stop required payments for a set period, but they handle interest very differently and have distinct eligibility rules. Choosing the wrong one can cost you thousands in additional interest. This guide breaks down how each option works so you can decide clearly when money is tight.

What Deferment and Forbearance Have in Common

Both deferment and forbearance let you temporarily stop making monthly payments on your federal student loans without being reported as delinquent. During either period, your loans remain in good standing and your credit score is not directly damaged.

Neither option reduces your loan balance. You still owe everything you borrowed, plus any interest that accrues during the pause. The critical difference is who pays that interest and under what circumstances.

Shared characteristics:

• They are temporary, typically lasting a few months to up to three years.
• You must apply through your loan servicer.
• They are available for federal student loans. Private lenders may offer their own versions with different rules.
• Neither counts as a qualifying payment toward forgiveness or PSLF.

How Deferment Works

Deferment is a temporary postponement you can request when you meet specific eligibility criteria. The key advantage is that the federal government may pay the interest on your subsidized loans during deferment, keeping your subsidized balance flat.

Common qualifying situations:

• Enrollment in school at least half time
• Active duty military service
• Unemployment (limited to three years)
• Economic hardship as defined by federal guidelines
• Service in the Peace Corps or AmeriCorps

For subsidized Direct Loans, interest does not accrue during deferment because the government covers it. For unsubsidized loans and PLUS Loans, interest continues to accrue. If you do not pay it during deferment, it capitalizes when deferment ends, meaning it is added to your principal balance.

How Forbearance Works

Forbearance also pauses your required payments, but at a steeper cost. Interest accrues on all of your federal loans, including subsidized loans. The government does not cover any interest. When forbearance ends, all unpaid interest capitalizes.

There are two types:

• General forbearance: You request this from your servicer, who decides whether to grant it. You must demonstrate financial hardship, illness, or another acceptable reason. Granted in 12-month increments, up to three years total.
• Mandatory forbearance: Your servicer must grant this if you meet specific criteria, such as serving in a medical or dental residency, or if your total student loan payments exceed a certain percentage of your gross income.

Forbearance is easier to obtain than deferment because eligibility criteria are broader, but the interest cost is higher.

Side-by-Side Comparison

Feature	Deferment	Forbearance
Interest on subsidized loans	Paid by the government	Accrues; your responsibility
Interest on unsubsidized loans	Accrues; your responsibility	Accrues; your responsibility
Eligibility	Specific criteria (school, military, unemployment)	Broader criteria (financial difficulty, medical situations)
Maximum duration	Varies by type, often up to 3 years	12 months at a time, 3 years cumulative
Counts toward forgiveness	No	No
Impact on credit	No negative impact if in good standing	No negative impact if in good standing

The Real Cost of Pausing Payments

The biggest risk with both options is interest capitalization. When unpaid interest is added to your principal, you start paying interest on a larger amount. This compounding effect can significantly increase total loan cost.

Consider a borrower with $30,000 in unsubsidized loans at a 5% interest rate who takes a 12-month forbearance. Roughly $1,500 in interest accrues. When forbearance ends, that $1,500 capitalizes, bringing the balance to $31,500. Interest going forward is calculated on the larger amount, adding several hundred dollars in extra cost over a 10-year repayment period.

To minimize the damage:

1. Pay accruing interest during the pause if you can, even in small amounts.
2. Choose deferment over forbearance when you have subsidized loans.
3. Keep the pause as short as possible.
4. Consider an income-driven repayment plan instead. A zero-dollar IDR payment keeps you in repayment status and may count toward forgiveness.

When to Choose Deferment

Deferment is the better option when you qualify and have subsidized loans. The government covers subsidized interest, so your balance stays flat on that portion. If you are returning to school, serving in the military, or facing unemployment, deferment should be your first choice.

Deferment also makes sense when:

• You expect the disruption to be temporary and well-defined.
• You have a mix of subsidized and unsubsidized loans and want to at least stop interest growth on the subsidized portion.
• You meet the specific eligibility criteria without difficulty.

When to Choose Forbearance

Forbearance makes sense when you do not qualify for deferment but still cannot make payments. It serves as a safety valve when income has dropped, expenses have spiked, or you are dealing with a medical issue outside the deferment criteria.

Forbearance is also your primary option when:

• You have only unsubsidized or PLUS loans, where deferment offers no interest benefit.
• You need quick relief and forbearance processing is faster with your servicer.
• You are in a mandatory forbearance situation, such as a medical residency.

Treat forbearance as a short-term measure with an exit plan. The longer you stay, the more interest capitalizes.

Frequently Asked Questions

Does deferment or forbearance hurt my credit score?

No, as long as your loans were in good standing when you entered the pause. Your servicer reports your loans as deferred or in forbearance, not delinquent. However, late payments made before applying may have already been reported.

Can I make payments during deferment or forbearance?

Yes. You are not required to, but you are allowed to. Paying even a portion of accruing interest prevents capitalization and keeps your balance from growing.

Should I use forbearance or switch to an income-driven plan?

In most cases, an income-driven plan is better long-term. Your payment could be as low as zero dollars but still counts toward forgiveness. Forbearance offers no forgiveness credit and costs more in interest. Use forbearance only as a short-term bridge while your IDR application processes.

Can I get deferment or forbearance on private student loans?

Federal rules do not apply to private loans. Some private lenders offer temporary hardship programs, but terms, duration, and interest treatment vary. Contact your lender directly.

Final Thoughts

Deferment and forbearance are valuable tools when used strategically, but they are not free. Every month you pause payments without covering the accruing interest is a month your balance grows. If you qualify for deferment and have subsidized loans, choose deferment first. If forbearance is your only option, keep it brief and pay whatever interest you can. Before committing to either, check whether an income-driven repayment plan might solve the problem without stopping your forgiveness clock. The goal is not just surviving the rough patch but coming out the other side without adding years of extra cost to your loans.