🎓 Pausing Payments
Student Loan Deferment vs Forbearance: Differences, Costs and New Limits
Short answer: Both deferment and forbearance temporarily pause or reduce federal student loan payments. The main difference is interest: during a deferment, the government may pay interest on some loans (like subsidized loans), while during forbearance interest generally keeps building on all loans. For federal loans first disbursed on or after July 1, 2027, economic hardship and unemployment deferments end and forbearance is capped at 9 months in 24.
The core difference
| Deferment | Forbearance | |
|---|---|---|
| What it does | Pauses payments for a qualifying reason | Pauses or reduces payments, often when you do not qualify for deferment |
| Interest | May not accrue on subsidized loans; usually accrues on unsubsidized loans | Interest accrues on all loans |
| Eligibility | Specific reasons such as school enrollment, military service or certain hardships | More flexible; may be granted by your servicer |
| Typical length | Varies by reason | Often granted in periods up to 12 months at a time for loans disbursed before July 1, 2027 |
Unpaid interest can be added to your balance, which makes the loan larger. Treat both as short-term tools.
What changes on July 1, 2027
Under the 2025 federal law, for new loans disbursed on or after July 1, 2027:
- Economic hardship and unemployment deferments are no longer available.
- Forbearance is limited to 9 months within any 24-month period.
If all your loans were disbursed before July 1, 2027, your existing options generally stay as they are today. Check current rules at the Department’s pages on deferment and forbearance.
When each makes sense
- Deferment may fit if you are back in school, serving in the military, or facing a qualifying hardship that your loans still allow.
- Forbearance may fit as a short bridge after a job loss, medical bill or income drop when you do not qualify for a deferment.
Hypothetical example: A borrower with $30,000 in unsubsidized loans uses a 12-month forbearance. Interest keeps building and can be added to the balance, so the loan is larger when payments resume. An income-driven plan with a low monthly payment might have cost less over time.
Better options to look at first
Before pausing payments, compare an income-driven plan. See 2026 repayment plans, how to apply for RAP and how to lower student loan payments. A low required payment keeps your account current, while a pause only delays the problem.
Effect on forgiveness and default
Private loans
Private lenders set their own hardship forbearance rules and often charge interest. Contact your lender and read the terms before you agree. See federal vs private student loans.
Rules change. This guide was reviewed on October 22, 2026 against official sources. Federal student-loan programs, deadlines and court-driven changes can shift quickly, so confirm current details at StudentAid.gov before you act.
Frequently asked questions
Official sources and references
Related guides
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