Student Loan Forbearance vs. Deferment: What's the Difference?

Forbearance and deferment both let you stop making federal student loan payments for a while — but they’re not the same thing, and the difference can cost or save you money. Here’s the short version: during a deferment, interest doesn’t build on some types of loans; during a forbearance, interest builds on all of them. Everything after that is detail.

The difference comes down to one thing: interest.

Interest. During a deferment, the government covers the interest on your subsidized loans, so those balances don’t grow while you’re paused. During a forbearance, interest builds on every loan you have — subsidized or not. If you remember one thing, remember that.

Who qualifies. Deferment is usually tied to a specific situation — you’re back in school, unemployed, on active military duty, or going through cancer treatment. Forbearance is broader; “I can’t afford my payment right now” can be enough.

Who decides. If you meet the rules for a deferment, your servicer has to grant it. General forbearance is discretionary — your servicer can say yes or no.

How long it lasts. Deferments can run for years in some situations. General forbearance comes in shorter blocks — up to 12 months at a time — with a cap on how long you can stack it.

What they share. Both require that your loans not be in default, both stop your monthly payment, and neither one, on its own, is reported to the credit bureaus as a negative mark.

A deferment pauses your payments when you’re in a qualifying situation. The common ones for federal loans include enrollment in school at least half-time, unemployment, economic hardship, active-duty military service, a graduate fellowship, a rehabilitation training program, and cancer treatment. Parent PLUS borrowers can also defer while the student they borrowed for is in school.

For most of these you apply and show you meet the requirements. The exception is in-school deferment, which your servicer usually starts automatically once your school reports your enrollment.

The interest break only applies to subsidized loans. On Direct Subsidized Loans, subsidized Stafford Loans, and Perkins Loans, the government pays the interest during an approved deferment, so the balance doesn’t grow. On unsubsidized loans — Direct Unsubsidized, unsubsidized Stafford, and every PLUS loan, including Parent PLUS — interest keeps adding up. If you don’t pay it as it accrues, it capitalizes (gets added to your principal) when the deferment ends, so you then pay interest on a bigger balance.

That’s the piece borrowers miss most: if all of your loans are unsubsidized, a deferment doesn’t spare you any interest. The break is real only when you have subsidized loans.

How long you can defer depends on the type. Unemployment and economic hardship deferments each run up to three years total. In-school deferment lasts as long as you stay enrolled at least half-time. The military and cancer-treatment deferments follow their own timelines.

One change to know about: under a 2025 law, economic-hardship and unemployment deferments won’t be available for loans first made on or after July 1, 2027. If your loans predate that, this doesn’t touch you — but it’s a reason not to assume those options will always be there for future borrowing.

A forbearance also pauses or reduces your payments, but interest builds on all of your loans the entire time — including subsidized ones. There are two kinds of forbearance.

General (discretionary) forbearance is the one most people use. You request it because of a temporary financial setback — a job loss, a drop in income, high medical bills. Your servicer doesn’t have to grant it, and it comes in blocks of up to 12 months at a time, with a limit on how long you can keep renewing it (generally about three years total).

Mandatory forbearance is one your servicer must grant if you meet the rules. It covers specific situations — a medical or dental internship or residency, National Guard activation, AmeriCorps service, or student loan payments that eat up 20% or more of your total monthly gross income.

One detail has flipped in recent years: the interest you build during a forbearance generally isn’t folded into your principal the way deferment interest is. You still owe every dollar of it, and it can nudge your monthly payment up once you resume — but it doesn’t compound onto your balance through capitalization the way unpaid deferment interest does. So the old rule of thumb that “forbearance is worse because it capitalizes” no longer holds the way it once did.

General forbearance is also tightening for the newest borrowers. For loans first made on or after July 1, 2027, general forbearance is capped at nine months within any two-year (24-month) window. Older loans keep the current, more flexible limits.

Neither one is reported to the credit bureaus as a negative event. While your loans are paused, your servicer won’t report missed or late payments, because you’re not missing payments — you have permission to stop. Your servicer may note that the loan is in deferment or forbearance, but that status doesn’t lower your credit score.

The catch is timing. If you already fell behind before you set up the deferment or forbearance, those earlier late payments can still show. A pause protects you going forward; it doesn’t erase what happened before it started.

Choosing usually comes down to three questions — and “which one is better?” isn’t really one of them.

Does the time count toward forgiveness? If you’re working toward Public Service Loan Forgiveness or forgiveness through an income-driven plan, this matters most. As a general rule, months spent in deferment or forbearance don’t count toward those forgiveness milestones — a few narrow exceptions aside — so pausing freezes the progress you’ve built. If forgiveness is your path, a pause can cost you months you don’t get back.

Have you already lowered the payment? This is where borrowers often get steered wrong. You call your servicer, say “I can’t afford this,” and the answer comes back “take a forbearance.” But there’s another question worth asking first: can we lower my payment? An income-driven repayment plan sets your payment based on income and family size, and on the older plans it can be as low as $0 a month (the newer Repayment Assistance Plan, for loans taken on or after July 1, 2026, sets a $10 monthly minimum). Either way, a small income-driven payment usually still counts toward forgiveness, while a pause usually doesn’t. Lowering the payment keeps you in active repayment; stopping payments takes you out of it. A pause makes the most sense once you’ve pushed the payment as low as it will go and it’s still out of reach.

Which one do you qualify for? If your loans are subsidized, a deferment genuinely spares you interest — a point in its favor. If everything you have is unsubsidized, interest builds either way, so that edge disappears and the choice comes down to eligibility and how long you need. And often you’ll only qualify for one of them, which settles it.

One rule sits underneath all of this: you can’t use deferment or forbearance on loans that are already in default. If you’re there, the move is to get out of default first — through rehabilitation or consolidation — which restores access to these options.

To request either one, you identify the specific type you qualify for, complete that form (on your servicer’s website or the federal forms library at studentaid.gov), and send in any documentation the relief type requires. Some deferments, like in-school, happen more or less automatically.

Private lenders set their own pause terms, and they’re usually far less generous than the federal versions. There’s no government interest subsidy, so interest builds no matter what, and the pause windows tend to be shorter — sometimes just a few months, sometimes up to a year total. If you have private loans, call your lender and ask exactly what they offer and for how long, because it varies a lot from one company to the next.

• Federal student loan repayment options

• How to defer student loans in default

• What is a grace period for student loans?