Which Is Better If I Can’t Pay My Student Loans: Deferment or Forbearance?

If you’re eligible, a deferment is a better option than a forbearance. You might also consider other options.

Getting a deferment of your federal student loans is a better option than a forbearance—if you’re eligible. The government picks up the tab for interest on subsidized loans during a deferment period, which makes this option cheaper for most people. With a forbearance, interest accrues.

If you’re having trouble making your federal student loan payments, you might also consider changing your repayment plan, finding out if you qualify for loan cancellation, or taking out a Direct Consolidation Loan.

Deferring Your Student Loans

A deferment excuses you from making student loan payments for a set period of time because of a specific condition in your lifelike returning to school, economic hardship, or unemployment. Interest will not accrue on subsidized loans during the deferment period.

Subsidized loans compared to unsubsidized loans. Students get subsidized loans based on need, and these loans do not accrue interest while students are still in school or during a deferment. An unsubsidized loan, however, accrues interest from the time it’s dispersed.

Qualifying for deferment. You can defer repayment of a federal student loan if:

  • you meet specific criteria and conditions for your type of loan, and
  • you are not more than 270 days behind (in "default") in loan payments.

Most common types of deferments. You might be eligible for a deferment on your federal student loans if you're:

  • enrolled in school at least half-time
  • enrolled in an approved graduate fellowship program
  • a parent who received a Direct PLUS Loan or a FFEL PLUS Loan, and the student for whom you obtained the loan is enrolled at least half-time at an eligible college or career school (and for an additional six months after the student ceases to be enrolled at least half-time)
  • unemployed and seeking employment
  • suffering economic hardship
  • serving in the military on active duty in connection with a war, military operation, or national emergency (or served within the past 13 months)
  • disabled and in a rehabilitation program
  • receiving treatment for cancer (and for six months thereafter), or
  • serving in the Peace Corps.

(To learn more who can qualify for a deferment, see What's the Difference Between Student Loan Forbearance and Deferment?)

How to get a deferment. Contact your loan servicer to apply for a deferment.

Getting a Forbearance

In a forbearance, you stop making payments (or make smaller payments) for a set period of time.

Interest continues to accrue during a forbearance. When you don’t pay the interest on a loan, the servicer generally capitalizes it—that is, the interest will be added to the principal amount of your loan. (Though, unpaid interest isn’t capitalized on Perkins Loans, according to the Department of Education.) So, the total amount you’ll have repay over the life of your loan will usually be higher.

Qualifying for a forbearance. Forbearance on federal student loans may be granted for a number of reasons, including:

  • financial problems
  • medical expenses
  • a change in your employment, or
  • another reason that's acceptable to your loan servicer.

In some situations, your loan servicer decides whether to grant your request for a forbearance. But in others—like if you’re serving in an AmeriCorps position for which you received a national service award or performing teaching service that would qualify you for teacher loan forgiveness (Direct Loans and FFEL Program loans only)—forbearance is mandatory. (To learn more who can qualify for a forbearance, again, see What's the Difference Between Student Loan Forbearance and Deferment?)

How to get a forbearance. To apply for a forbearance, contact your loan servicer, explain your situation, ask for a forbearance, and fill out the appropriate forms. If you're in default, you can't get a forbearance.

Paying the interest during the forbearance period. If you don’t qualify for a deferment, you could choose to pay the interest as it accrues during a forbearance period to keep the loan from ballooning once your forbearance ends. However, if you’re trying to pay down other higher interest debt, this might not make sense. For example, suppose Sammy Student owes $10,000 at 5% on a federal student loan and $10,000 at 18% on a credit card. In this situation, it makes more sense to first pay down the credit card debt because of the high interest rate. (To get an idea about which debts you should pay before others, see Which of My Debts Should I Repay?)

It also doesn’t make sense to pay the interest if you’re working towards Public Service Loan Forgiveness (PSLF) because the interest that’s tacked on to the principal will be forgiven once the loan is forgiven. (While student loan forgiveness is sometimes taxable, student loan amounts forgiven under PSLF are not considered income for tax purposes according to the Department of Education.)

Other Options: Changing Repayment Plans, Loan Cancellation, Consolidation

In addition to considering deferment and forbearance, it’s a good idea to think about changing your repayment plan, looking into whether you can cancel your loans, and considering a Direct Consolidation Loan.

Change your repayment plans. If you’re having trouble making your student loan payments, you might also consider the different repayment plans that the Department of Education offer for federal student loans. For more information, see Student Loan Repayment Plans and How to Choose a Student Loan Repayment Plan.

Find out if you qualify for cancellation. Under certain limited circumstances, you might be able to cancel your student loans, which means you don’t have to pay them. Getting your student loans cancelled isn’t easy; you'll have to meet specific conditions depending on the type of loan you have. (To learn more about cancellation options for federal student loans, see Student Loan Relief: Canceling Your Loans.)

Consider consolidating your loans. If you have multiple student loans, you might be able to lower your monthly payment with a Direct Consolidation Loan. A Direct Consolidation Loan allows you to combine all your federal student loans into one loan for one monthly payment. (Learn more about federal Direct Consolidation loans, see Student Loan Consolidation: Federal Student Loans, Private Student Loans.)

Learn More

To learn more about deferment or forbearance of your student loans—or about different repayment plans, cancellation options, and Direct Consolidation Loans—go to the U.S. Department of Education’s Federal Student Aid website.

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