Deferment and forbearance are two ways to temporarily pause or reduce federal student loan payments when you are facing a hardship such as unemployment, financial difficulty, or a return to school. They sound similar, but they treat interest differently — and that difference matters.
Deferment:
- Lets you temporarily stop making payments.
- On subsidized loans, interest generally does not accrue during deferment — the government covers it.
- On unsubsidized loans, interest does still accrue.
Forbearance:
- Also lets you pause or reduce payments.
- Interest accrues on all loan types during forbearance — including subsidized loans.
- Often used when you do not qualify for deferment.
The key takeaway: if you qualify for deferment on subsidized loans, it is usually the better choice, because you avoid the interest. With forbearance, the unpaid interest can be added to your balance (capitalized), making the loan cost more over time.
Important: do not simply stop paying — that leads to delinquency and default. Contact your loan servicer before you miss a payment to discuss your options. Also ask about income-driven repayment plans, which can lower monthly payments without pausing the loan entirely.