Pros and Cons of Student Loan Deferment
Before you submit a deferment request, it’s important to weigh the benefits and drawbacks.
Pros of Deferment:
- Interest savings on subsidized loans. If you have subsidized federal loans or Perkins loans, the government will cover the interest during deferment, saving you money.
- Protects your credit. Missing payments can damage your credit score. Deferment prevents late payments from being reported, keeping your score safe.
- Breathing room financially. Temporarily pausing payments gives you more flexibility to cover essentials like housing, medical bills, or groceries.
Cons of Deferment:
- Interest may accrue. If your loans are unsubsidized or private, interest continues to build. At the end of deferment, unpaid interest is often capitalized (added to your balance), which increases your total debt.
- It’s only temporary. Most deferments last a few months to a few years. Once the deferment ends, you’ll need to resume payments, which may feel overwhelming if your financial situation hasn’t improved.
- Not always available. You must meet strict eligibility rules. Some borrowers may not qualify, and private loans usually have fewer options.
What Is Student Loan Forbearance?
Forbearance is another option that allows you to temporarily pause your student loan payments. If you’ve ever logged into your account and asked yourself, “why are my student loans in forbearance?”, the reason is usually that either you or your loan servicer placed your account in this status to give you financial breathing room.
Unlike deferment, forbearance is often easier to get, but the tradeoff is that interest always accrues—no matter what type of loan you have. Federal student loan forbearance comes in two main forms: mandatory forbearance and general (or discretionary) forbearance.
Mandatory Forbearance
If you meet certain requirements, your loan servicer must approve your forbearance request. Some common situations include:
- AmeriCorps service. If you’ve received a national service award, you qualify.
- Department of Defense repayment program. Borrowers eligible for partial repayment under this program are entitled to mandatory forbearance.
- Medical or dental internship or residency. If you don’t qualify for deferment, you may still be eligible under forbearance rules.
- National Guard service. If you’ve been activated by your governor but don’t qualify for military deferment.
- Teacher Loan Forgiveness program participation. If you’re performing qualifying service, you may be approved.
- Excessive debt burden. If your monthly student loan payments exceed 20% of your gross monthly income, you may qualify.
General (Discretionary) Forbearance
This option is less strict but depends on your loan servicer’s decision. You may request it if you’re:
- Struggling with financial difficulties
- Facing high medical expenses
- Experiencing job loss or reduced income
- Dealing with unexpected personal challenges
Federal general forbearance is usually granted for up to 12 months at a time, with a maximum cumulative limit of three years. For mandatory forbearance (except debt burden cases), there usually isn’t a lifetime cap, but you’ll still need to reapply periodically.
Private student loans are a different story. Many private lenders don’t offer forbearance at all, and those that do often provide very short relief periods—sometimes just a few months.
Pros and Cons of Student Loan Forbearance
Like deferment, forbearance has both advantages and drawbacks. Before you accept or apply for it, here’s what you should consider:
Pros of Forbearance:
- Protects your credit. Even if you can’t make payments, being in forbearance prevents missed or late payments from damaging your credit score.
- Helps during emergencies. If you’ve just lost your job, had a medical crisis, or experienced sudden financial stress, forbearance buys you valuable time.
- Guaranteed approval for mandatory cases. If you qualify for mandatory forbearance, your loan servicer cannot deny your request.
Cons of Forbearance:
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- Interest always grows. Unlike deferment (where subsidized loans may pause interest), forbearance doesn’t stop interest accumulation. You’ll owe more when repayment resumes.
- It’s short-term relief. Federal forbearance is usually granted in 12-month increments, and private loans may allow only a few months. This makes it a temporary solution rather than a long-term fix.
- Approval isn’t guaranteed for general forbearance. Discretionary forbearance is up to your servicer’s judgment, and private lenders may not offer it at all.
