Student Loan Deferment vs. Forbearance: The Key Differences
Both deferment and forbearance provide temporary relief, but they are not the same. To better understand why your student loans are in forbearance instead of deferment, let’s compare the main points side by side:
- Eligibility:
- Deferment applies in specific situations like school enrollment, unemployment, economic hardship, or cancer treatment.
- Forbearance is broader, covering financial struggles, medical expenses, or high debt-to-income ratios.
- Length of Relief:
- Deferment can last up to three years or longer depending on the reason (for example, military service or in-school deferment may continue indefinitely).
- Forbearance typically lasts 12 months at a time, with cumulative caps for certain types.
- Interest Accrual:
- Deferment may stop interest on subsidized loans.
- Forbearance always accrues interest, no exceptions.
In short, deferment is usually the more financially friendly option if you qualify. But forbearance is often more accessible, which is why many borrowers log in and wonder, “why are my student loans in forbearance rather than deferment?”—their servicer likely placed them there because it was the fastest or most available relief option.
Should You Choose Deferment or Forbearance?
Deciding between deferment and forbearance depends on your personal financial situation, your loan type, and the reason you’re pausing payments. If you’ve ever asked, “why are my student loans in forbearance instead of deferment?”, it’s usually because your servicer determined forbearance was the quickest or most suitable option based on your circumstances.
When Deferment May Be the Better Option
Deferment often offers more favorable terms, especially for federal subsidized loans. You might consider deferment if:
- You have subsidized federal loans. Interest does not accrue on these loans during deferment, which saves you money while you’re not making payments.
- You’re enrolled in school at least half-time. Automatic in-school deferment can make it easy to pause payments while focusing on your studies.
- You’re facing long-term unemployment or financial hardship. Deferment can provide up to three years of relief for those receiving government assistance, living below the poverty line, or actively seeking work but unable to find employment.
- You qualify for specific circumstances. Options exist for those undergoing cancer treatment, serving in the military, participating in graduate fellowships, or attending approved rehabilitation programs.
When Forbearance May Be the Better Option
Forbearance is often chosen when deferment is not available. You might lean toward forbearance if:
- You don’t meet deferment criteria. If your situation doesn’t qualify for deferment, general or mandatory forbearance may be your best route for temporary relief.
- You face short-term financial struggles. Unexpected expenses, job changes, or temporary income reductions may make forbearance a practical solution.
- You qualify for mandatory forbearance. This includes medical or dental interns, AmeriCorps members, teachers in qualifying programs, National Guard members, or borrowers with excessive debt relative to income.
- Your student loan debt is overwhelming. If your monthly payment exceeds 20% of your gross income, mandatory forbearance based on debt burden could provide the necessary relief.
How to Apply for Student Loan Deferment
If you have federal loans, submit a deferment request directly to your loan servicer using the correct form for your situation. Be sure to provide any documentation that proves your eligibility.
For private student loans, the process can vary. Contact your lender directly to see if deferment is offered and what steps you need to follow.
How to Apply for Student Loan Forbearance
For federal loans, you’ll need to review the forbearance forms and choose the one that matches your circumstances. Submit the completed form to your loan servicer.
Private loan borrowers should contact their lender to ask about forbearance options, eligibility, and how to apply. Keep in mind that private lenders may limit how long forbearance is granted or may not offer it at all.
