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? | Some types (cancer, economic hardship, military) | Some types (AmeriCorps, National Guard, some administrative) |
| 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 (not available for loans made from July 1, 2027) |
| Economic hardship | Receiving federal/state assistance; income below 150% poverty line; Peace Corps service | Up to 3 years (not available for loans made from July 1, 2027) |
| 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 at a time, with a cumulative limit of 3 years. For loans made on or after July 1, 2027, the 2025 law limits forbearance to 9 months in any 24-month period.
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 in situations such as declared disasters, the COVID payment pause (ended 2023), and the SAVE court case. SAVE has now ended, and borrowers who were in its forbearance are being moved into repayment on other plans.
Interest Capitalization: The Hidden Cost
Interest keeps accruing during a pause on unsubsidized loans (and on all loans in forbearance). For federal Direct Loans, that unpaid interest is capitalized (added to principal) when a deferment ends on an unsubsidized loan. Since July 2023, it is not capitalized when a forbearance ends, but you still owe it, and your payments go to that interest before principal.
Example:
- $40,000 unsubsidized balance at 6.5%
- 12 months of deferment
- 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
To limit the cost: Pay the accruing interest monthly even while payments are paused.
When to Use IDR Instead
If you’re pausing payments due to low income, income-driven repayment is almost always better than forbearance:
- IBR payments can be $0/month if your income is low enough, and RAP payments start at $10/month
- On-time income-driven payments count toward PSLF and income-driven forgiveness
- On RAP, interest your payment doesn’t cover is waived, so your balance doesn’t grow
- Most 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
Related guides
Part of the student loan guide.
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