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Deferment and Forbearance
Events like losing a job, getting sick, and having financial trouble can be additional challenges to your education debt goals. In such situations, making on-time student loan payments may not seem like a priority.
Before missing any payments, though, know that under certain circumstances you can temporarily suspend your payments with deferment and forbearance. Find out about the important differences between these postponement options—and find the option right for you.
Deferment: Things to Know
- Different deferments have different criteria.
- Unemployment, extreme economic hardship, enrolling in school at least half time, or active military duty may qualify you.
- Keep in mind that most deferments are only offered for a limited amount of time over the life of your loan, so use that time wisely.
- During a deferment, the federal government pays any interest that accrues on your subsidized loans—but not on unsubsidized loans. Unsubsidized interest on deferred loans can increase the amount you owe overall.
See how a deferment could impact your loan by using our deferment calculator.
You can learn more about Perkins loan deferment options here.
Forbearance: Things to Know
- If you don’t meet the criteria for a deferment, you may qualify for forbearance.
- In most cases, forbearance is granted solely at the discretion of your lender or servicer and are only offered for limited amounts of time.
- Forbearances are usually reserved for cases of financial hardship or illness.
- Unlike a deferment, in forbearance both subsidized and unsubsidized portions of your loan continue to accrue interest.
- At the end of the forbearance period, the interest is capitalized (added to the principal balance of the loan).
- Forbearance can increases the amount you owe if you choose not to pay the interest that is accruing.
See how forbearance could impact your loan by using our forbearance calculator. Contact your lender or servicer for more information.
Perkins Forbearance: Things to Know
Perkins loan forbearance is designed to help borrowers who are experiencing periods of financial hardship, illness, or other acceptable reasons. Interest would continue to accrue though payments would be postponed.
- Forbearance is granted solely at the discretion of your lending school.
- Though not required, the Department of Education encourages schools to grant forbearance for borrowers serving with Americorps.
- Offered for up to one year at a time, but may not exceed a total of three years over the lifetime of the loan.
- Hardship forbearance may be granted if the total amount you pay on your federal student loans is 20% or more of your gross monthly income.
Choosing the Right Option
Deferment and forbearance are both preferable to missing loan payments. But, because forbearance increases the amount you owe, try to first qualify for a deferment, especially if you have subsidized loans.
Also, before postponing repayment, see if it makes sense for you to lower your payments with a different repayment schedule. This can save you money and preserve your deferment and forbearance eligibility for situations when you really need it. There are limits to how much deferment and forbearance time you can use.
Loans given to you by your state or a private lender will have different deferment and forbearance options from federal loans. To learn about your specific options, contact the servicer of your state loans, your state’s office of education, or your private lender.
Contact American Student Assistance® (ASA) to find out about these different postponement options and which you may qualify for. If you qualify, we can give you the right form and connect you with your servicer to pause your payments.
Keep Making Payments
Always continue making monthly loan payments until your lender or servicer notifies you that deferment or forbearance has been granted.
If you don’t get formal notification quickly, contact your servicer or ASA® to make sure your paperwork was received.