Forbearance vs. Deferment

Forbearance and deferment are two ways to temporarily stop or reduce your federal student loan payments. They look similar but have one important difference: who pays the interest during the pause.

Deferment

During a deferment, the U.S. Department of Education pays the interest on your Subsidized loans. The interest on your Unsubsidized loans still accrues — but the principal is paused. Deferments are available for specific qualifying situations: re-enrollment in school at least half-time, unemployment, certain economic hardships, active-duty military service, cancer treatment, and others.

Forbearance

During a forbearance, interest continues to accrue on all your loans, both Subsidized and Unsubsidized. You owe the interest. If you don't pay it as it accrues, it can capitalize when the forbearance ends — meaning it's added to your principal and you start owing interest on the interest. Forbearance is available for a wider range of situations than deferment and is often what servicers offer as a default solution.

When to use each

If you qualify for deferment (especially if you have Subsidized loans), deferment is almost always better than forbearance — the government covers some of the interest. If you only qualify for forbearance, consider whether you can keep paying just the interest each month, even if you can't make full payments. Doing so prevents capitalization.

Effects on PSLF and IDR

Time spent in forbearance or deferment generally doesn't count toward PSLF or IDR forgiveness. There are narrow exceptions (some forbearances have been recharacterized as qualifying under recent Department guidance), but the safer assumption is that paused months don't count.

The strategist's view

Servicers often default to offering forbearance because it's easy. Before agreeing to a forbearance, ask: do I qualify for an IDR plan that would lower my payment to zero (or close to it)? On SAVE or PAYE, low-income months can produce a $0 payment that does count toward forgiveness — much better than a forbearance.