Student Loan Deferment vs Forbearance: Which Should You Choose?

Both deferment and forbearance let you temporarily stop or reduce federal student loan payments. The critical difference is what happens to interest — and that determines whether your balance grows while you are paused.

Key Takeaway: In deferment, the government pays interest on Subsidized loans (not on Unsubsidized/PLUS). In forbearance, you pay all interest on every loan type — and it capitalizes if unpaid. Forbearance is the more expensive pause.

Deferment: Interest Paid on Subsidized Loans

Deferment is a period authorized by law during which payments are postponed. Common deferments:

• In-school (at least half-time)
• Graduate fellowship
• Economic hardship (Peace Corps, certain unemployment)
• Military service / post-active-duty
• Rehabilitation training
• Cancer treatment

During deferment, the government pays accruing interest on Subsidized loans. On Unsubsidized and PLUS loans, interest still accrues and capitalizes.

Forbearance: You Pay All Interest

Forbearance is granted at the servicer's discretion (or automatically in certain cases) when you cannot make payments. Types:

• General forbearance: financial difficulty, medical expenses, etc.
• Mandatory forbearance: required in specific cases (e.g., serving in AmeriCorps, National Guard, or payments exceed 20% of income under the Department of Defense program).
• Disaster / COVID-related: special administrative pauses.

During all forbearance, interest accrues on every loan type and capitalizes if not paid.

Which Should You Choose?

• If you qualify for a deferment and hold Subsidized loans, deferment is cheaper.
• If you hold only Unsubsidized/PLUS, deferment and forbearance cost about the same on interest — but an IDR plan with a low/$0 payment may be better than pausing, because it counts toward forgiveness.
• Consider an IDR plan over either pause if your goal is forgiveness (PSLF or IDR), since pauses do not count as qualifying payments.

Pay Interest During the Pause

Whatever the pause type, you can pay accruing interest as it comes due to prevent capitalization. Even small payments help (see extra payments).

Deferment Types and Who Qualifies

A deferment is a period when you do not have to make payments, and — crucially — the government may pay the interest on certain loans. Common deferments:

Key point: during a deferment, the government covers accruing interest only on Direct Subsidized Loans. On unsubsidized and PLUS loans, interest still accrues and will capitalize when the deferment ends. Always ask your servicer which loans are covered, and consider paying the accruing interest on unsubsidized/PLUS loans during the deferment to avoid a larger balance at the end.

Forbearance: General vs. Mandatory

A forbearance also pauses or reduces payments, but interest accrues on all loan types and capitalizes when it ends. Two flavors:

• General (discretionary) forbearance: granted by your servicer at its discretion, typically up to 12 months at a time and renewable. Used for temporary hardships like a medical expense or short gap between jobs.
• Mandatory forbearance: the servicer must grant it if you qualify — for example, serving in a medical or dental internship/residency, National Guard duty, or payments exceeding 20% of your monthly gross income under certain plans.

Because forbearance is rarely interest-free, it is best as a short bridge. A better long-term fix for unaffordable payments is usually an IDR plan, whose low payment also counts toward forgiveness. The 2020–2023 COVID payment pause was a rare interest-free administrative forbearance; do not assume future pauses will be interest-free. If you need relief, apply for an IDR plan in parallel so you are not stuck in repeated forbearances that grow the balance through capitalization.

The True Cost: IDR vs. Forbearance

Borrowers often reach for forbearance by default, but an IDR plan is frequently cheaper and more productive. Example: $50,000 at 6.39%, borrower with AGI $40,000.

In forbearance, the balance grows untouched and the accrued interest capitalizes at the end — you owe more than you started. On an IDR plan, the same period produces a payment that chips away at the debt and advances your forgiveness clock. If you truly cannot pay anything, forbearance prevents default, but switch to IDR the moment your income recovers. Compare both with our calculator.

A useful threshold: if your IDR payment is within roughly $50 of a forbearance, choose IDR every time — you make progress instead of treading water, and you avoid the capitalization cliff when the forbearance ends. Only use forbearance when the IDR payment itself is unaffordable in a given month, and cap it to the shortest period possible.

The COVID-19 Forbearance Lesson

The 2020–2023 payment pause was a rare interest-free administrative forbearance — Congress explicitly waived interest. Ordinary forbearance is not interest-free; interest accrues on all loans and capitalizes. The pause taught many borrowers how much balances can shift, but do not assume future pauses will be interest-free. When you need relief, an IDR plan with a low payment is often better than a standard forbearance because it counts toward forgiveness.

The lasting lesson is to treat forbearance as a last resort, not a default. A borrower who leans on repeated forbearances can watch the balance grow untouched for years, then face a capitalization cliff and a larger payment. If your income is low, an IDR plan almost always beats forbearance: same or lower monthly outlay, progress instead of stall, and no surprise interest dump at the end. Use our calculator to compare the two before requesting relief.

How to Request Deferment or Forbearance

1. Contact your servicer (free) before you miss a payment — proactive contact protects your credit.
2. For deferment, provide documentation (enrollment, fellowship, hardship, or military orders) so the right type is applied.
3. For general forbearance, request it and specify the reason; it is granted at the servicer's discretion, up to 12 months, renewable.
4. Keep paying accruing interest if you can, to limit capitalization, especially on unsubsidized and PLUS loans.
5. Mark your calendar — you must reapply; a lapse ends the pause and risks delinquency.

Document every call and letter. If a deferment or forbearance is mishandled, the servicer guide explains how to dispute and escalate. Remember that while in these statuses, your qualifying-payment clock for PSLF is paused — plan around it if forgiveness is your goal.

Quick Decision: Deferment or Forbearance?

Use this summary to choose:

The recurring theme: an IDR plan usually beats both for borrowers with low income, because the payment is low and counts toward forgiveness. Deferment is best when the government covers your subsidized interest; forbearance is the shortest-term bridge. See the capitalization guide for why letting either lapse without a plan grows your balance.

Interest During Deferment: Worked Numbers

Deferment feels free, but on unsubsidized and PLUS loans interest keeps accruing and capitalizes at the end. Example: $40,000 in unsubsidized loans at 6.39% in a 3-year economic-hardship deferment accrues about $7,700 of interest, which is added to principal when the deferment ends. You then pay interest on $47,700 for the rest of the term — a meaningful lifetime cost.

By contrast, a subsidized loan in the same deferment has that interest paid by the government, so the balance does not grow. The lesson: deferment is genuinely helpful for subsidized loans and a mixed blessing for unsubsidized/PLUS. If you can pay even part of the accruing interest during deferment, you shrink the capitalized amount. Our amortization calculator projects the post-deferment balance, and the grace-period guide covers the similar interest dynamic before the first payment.