Deferment and forbearance are options for qualifying borrowers who want to avoid defaulting on their federal student loans. Both deferment and forbearance allow you to temporarily postpone or reduce your federal student loan payments. The main difference between deferment and forbearance is that interest always accrues when you’re in federal forbearance, while deferment is interest-free in some cases. Here are some key points to keep in mind:

Deferment:

• Generally better if you have subsidized federal student loans or Perkins loans and you are unemployed or dealing with significant financial hardship.
• Interest accrual pauses if you have subsidized loans or Perkins Loans.
• Must be tied to a qualifying event, such as going back to school at least half-time or experiencing financial hardship.
• If you qualify for deferment, your servicer must grant it.

Forbearance:

• Generally better if you don’t qualify for deferment and your financial challenge is temporary.
• Interest always accrues when you’re in federal forbearance.
• Allows borrowers to skip loan payments without becoming delinquent, an important protection for someone facing temporary financial hardship.
• Should be considered only in times of absolute necessity, because of the interest capitalization, but also because it may ultimately extend your repayment period.

Its important to note that deferment or forbearance may mean a longer repayment term in the long run, but either can be a lifeline for a struggling student loan borrower. If youre eligible for a deferment or forbearance, you can temporarily suspend your payments. However, its recommended that you contact your servicer to determine which option you qualify for and to ensure that the new payment is affordable.