be_ixf;ym_201910 d_20; ct_50
Helping beyond just taxes. Find out more

Student Loan Forbearance vs. Deferment: Which Temporary Relief Takes the Cake?

Student Loan Forbearance: Cat taking cake
Currently, about 3.3 million borrowers are in student loan deferment and 2.6 million borrowers are in student loan forbearance.

There’s nothing sweeter than relief from student loans. The ultimate relief? Paying off your loans obviously. But there’s no Gas-X for student loans and paying them off can feel so far away when you’re struggling in repayment. So, what if you’re having trouble making your payments and you need a little sweet relief sooner? There are two paths to temporary relief: student loan forbearance and student loan deferment.

Both forbearance and deferment allow you to temporarily stop making payments on your student loans or reduce your monthly payment amounts for a certain period of time. Currently, about 3.3 million borrowers are in student loan deferment and 2.6 million borrowers are in student loan forbearance. If you just need short-term relief to get back on your feet, one of these options could be a good solution for you. But which one is best?

Student loan forbearance

What is forbearance?

Student loan forbearance is an approved period of time in which you temporarily stop making payments or make reduced payments on your loan. Interest will accrue during forbearance periods. 

Are there different types of student loan forbearance?

For federal student loans, there are two different types of forbearance. Both types of forbearances are not granted for more than 12 months at a time, but you can request another forbearance if needed. 

1. General forbearance

General forbearance is sometimes called a “discretionary forbearance.” This is because your loan servicer decides whether to grant a request for a general forbearance

You request a general forbearance if you temporarily cannot make your monthly payments for one of the following reasons:

  • Financial difficulties
  • Change in employment
  • Medical expenses
  • Other reasons that your loan servicer deems acceptable

2. Mandatory forbearance

As opposed to a general forbearance, your loan servicer must grant a mandatory forbearance if you meet the eligibility requirements. 

You could be eligible for a mandatory forbearance if:

  • You’re serving in a medical or dental internship or residency program
  • The total amount you owe each month for all the student loans you received is 20 percent or more of your total monthly gross income (for up to three years)
  • You’re serving in an AmeriCorps position for which you received a national service award
  • You’re performing teaching service that would qualify you for teacher loan forgiveness
  • You qualify for partial repayment of your student loans under the U.S. Department of Defense Student Loan Repayment Program
  • You’re a member of the National Guard and have been activated by a governor, but you’re not eligible for a military deferment

Discretionary forbearances are much more common than mandatory forbearances.

2018 Direct Loans by Student Loan Forbearance Type

Student loan deferment

What is deferment?

Student loan deferment is an approved period of time in which you stop making payments on your loan. During a deferment, you’re responsible for any interest that occurs on all loan types except subsidized and Perkins loans.

Are there different types of student loan deferment?

The different types of deferment are actually different reasons for deferment. These reasons include (but are not limited to):

  • Unemployment
  • Economic hardship
  • Military service
  • Being enrolled in school
  • Six-month post-enrollment period 

The most common reason is being enrolled in school, as you can see below.

2018 Direct Loans by Deferment Type

So, which takes the cake: forbearance or deferment?

If you have subsidized or Perkins loans, you’d be better off requesting a deferment. You will not have to pay any interest that accumulates while these loans are in deferment. Meanwhile, you would have to pay back any and all interest that accumulates on subsidized or Perkins loans while in forbearance.

But if you have unsubsidized loans, PLUS loans, or FFEL PLUS loans, deferment and forbearance are on an even playing field for you. You’ll have to pay back your interest on these loans whether they’re in deferment or forbearance.

Federal student loans offer both forbearance and deferment as described. If you have private student loans, you’ll need to discuss with your lender what options are available to you. Forbearance and deferment options differ by lender. 

Struggling to make student loan payments? Don’t wait until you fall into the default pit. The paperwork to apply for forbearance or deferment takes time to process. So you’ll need to apply as soon as possible to ensure your loan servicer doesn’t try to make you pay what you can’t afford. Student loan services can help you find a way to solve your student loan issues. 

 

Disclaimer: The viewpoints and information expressed are that of the author(s) and do not necessarily reflect the opinions, viewpoints and official policies of any financial institution and/or government agency. All situations are unique and additional information can be obtained by contacting your loan servicer or a student loan professional.

Yep, now you can.

student loans. taxes. business.

Share on linkedin
Share on twitter
Share on facebook
Share on email

Share

Share on linkedin
Share on twitter
Share on facebook
Share on email

Subscribe

Get the latest from MoneySolver's blog right in your inbox.

Blog Subscribe

Must Reads

Close Menu

California Privacy Policy

MoneySolver (the “Company”) collects various types of personal information about you, both online and offline, during the course of our relationship. Under California law, if you are a resident of California, you may make a written request to the Company about how we have shared your personal information during the prior calendar year with third parties, and our affiliates, for their direct marketing purposes. In response to your written request, the Company is allowed to, instead, provide you with a cost-free means to opt-out of such sharing, or a “Customer Choice Notice”. For purposes of this California Privacy Notice, third parties may include companies within our “family” of companies, such as those companies affiliated with or owned directly or indirectly by MoneySolver.

The Company has chosen to provide you with a cost-free means to opt-out of such sharing. If you would like to exercise your rights under California law, please send your written request to the postal address below. Please allow 30 days for processing of your request.

MoneySolver
Attn: Marketing – CA Policy
9000 Southside Blvd., Suite 11000
Jacksonville, FL 32256

Or email marketing@moneysolver.org

If you would like to know what information is gathered about you online when you visit the Site, and how it is used, you may review the Company Privacy Policy by clicking here.

You are about to proceed to an offsite link. MoneySolver has no control over the content of the external site. Click OK to proceed.

Contact and Data Lead
MoneySolver
Secured By miniOrange