What's student loan deferment vs. forbearance?

Feeling overwhelmed by your student loan payments? Have you lost your job? Facing an economic hardship? Or are you thinking about returning to school? If so, you might be considering student loan deferment or student loan forbearance as a way to pause your payments until you’re ready to start up your repayment plan again.

But what's the difference between these two programs, and how do you know which is right for you? Here's an overview of student loan deferment vs. forbearance.

Student loan deferment pauses loan payments longer

Deferment is a way to pause your student loan payments up to three years — although the length of a deferment will vary depending on the reason.

To qualify to defer your loans, you must be:

• Still in school at least half-time (or the student for whom you received a federal Parent PLUS loan is still in school)
• Returning to school at least half-time
• Unemployed
• Receiving federal or state assistance like Supplemental Nutrition Assistance Program (SNAP) benefits or Temporary Assistance for Need Families (TANF)
• On active military duty or in the Peace Corps
• Diagnosed with cancer and are getting treatment
• Earning less than 150% of your state's poverty benchmark

If you meet one of these eligibility requirements, your loan servicer could grant you a deferment so long as you have deferment time available. One of the main benefits of deferments over forbearance is that you don't accrue interest on your federal Direct Subsidized or Perkins Loans during deferment. Also, if you have federal subsidized student loans, the Department of Education will even pay your interest for you while in deferral. Learn more about this process and how to get started here.

Student loan forbearance options give you time, but with interest

Student loan forbearance allows you to pause monthly payments on your federal student loans for no more than 12 months. If you are still experiencing financial hardship, you can reapply for forbearance after that time. There's no maximum on the number of times you can apply for forbearance.

However, getting forbearance isn't as straightforward as a student loan deferment. There are two types of forbearance: general and mandatory. Under general forbearance, no specific qualifying event is needed; forbearance is granted at the discretion of your loan servicer. Reasons for approval include:

• Financial difficulties
• Medical expenses
• Job changes
• Other reasons approved by your loan servicer

Mandatory forbearance for federal student loans is something that your federal loan servicer must approve. You may qualify if:

• You're a medical intern or resident
• Your loan balance is 20% or more of your monthly gross income
• You're serving in AmeriCorps on a national service award
• You're a teacher at a school or program that would qualify you for the Teacher Loan Forgiveness Program
• You're a member of the U.S. National Guard and on active duty
• You work for the U.S. Department of Defense and qualify for the military student loan repayment program

With both types of forbearance, your student loans will continue to accrue interest even while your monthly payments are paused.

Deferment and forbearance for private student loans

If you have student loans from a private lender, it's still possible to get a student loan deferment or forbearance, depending on your lender. Some lenders have options for you to delay your monthly payments with or without interest, but in all cases, you should contact your lender for further details.

If your lender doesn't have an option that's right for you, you might consider refinancing your loans which could result in a lower monthly payment or a lower interest rate. Citizens has flexible student loan refinancing options that you can explore, with repayment plans that might fit your situation better. Keep in mind that while you can refinance federal student loans into a private student loan, it may result in the loss of federal student loan benefits.^† Make sure you understand and carefully consider the impact of refinancing before you proceed.

How to apply for deferment or forbearance

To apply for either program, you'll need to complete the appropriate form and submit it to your student loan servicer. With student loan forbearance, there is one standard form, whereas with deferment, you have to fill out the form that fits your particular situation. These forms are all available on your student loan servicer's website.

Ready to take the next step?

Deferring or forbearing your student loans could help you get a better handle on your student loan debt. Once you assess your debt, refinancing may be a better option. If you're looking to take greater control of your finances, learn more about refinancing your student loans with Citizens.