Student Loan Deferment vs Forbearance

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Deferment vs Forbearance
If you're struggling to make your student loan payments due to a financial hardship, you might benefit by entering into a forbearance or deferment. Student loan forbearance and student loan deferment are two different ways to put your payments on hold while you recover.

Why Would You Need to Defer or Get Forbearance?

Life happens, and we all encounter financial hardships at some point in our lives. Unless, of course, your parents started you out in life with a small loan of a million dollars. In that case, you've probably never known what it's like to stare at a 3 digit total on a bill and feel your mind race to find a way to pay it. 

If you do struggle to make your loan payments because you encountered a financial hardship of some kind, there are ways to put it off for a bit and give you a chance to recover. You can utilize a Forbearance or Deferment to accommodate to any financial hardship.

Keep in mind that interest could accrue during this time period. It is usually best to focus on a consolation to reduce monthly payments, if eligible. Otherwise, you might be entered back into a "Standard Repayment" Plan, where your monthly payments will likely be extremely high.

Once a forbearance or deferment expires, your loan servicer will automatically place the borrower back into a “Standard Repayment” program, which is typically 1% of the debt load. 

Make sure that if you do enter into a forbearance or deferment, you have a repayment plan that works for your budget set up for afterward. You can use this period to apply for a consolidation and new payment plan if necessary. It will put an "emergency" stop on your payments while you submit the proper family and financial data to qualify for a repayment plan that suits your income.

Before you choose how to proceed, it's important to first know the difference between the two options.

Deferment vs Forbearance


Student Loan Deferment

A temporary postponement of payment on a loan that is allowed under certain conditions and during which interest generally does not accrue on Direct Subsidized Loans, the subsidized portion of Direct Consolidation Loans, Subsidized Federal Stafford Loans, the subsidized portion of FFEL Consolidation Loans, and Federal Perkins Loans. All other federal student loans that are deferred will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s).US Department of Education

In plain English:

  • A student loan deferment postpones your payments for a while.
  • It usually does this without accruing interest on certain kinds of loans.
  • If you do end up accruing interest during this time, you may either pay it off as it comes or allow it to be capitalized.
  • If you don't pay back the interest and allow it to be capitalized, the overall amount you pay on your loan over time may be higher.

In deferment, you are usually NOT responsible for interest on these loan types:
  • Direct Subsidized Loans
  • Subsidized Federal Stafford Loans
  • Federal Perkins Loans
  • The subsidized portion of Direct Consolidation Loans
  • The subsidized portion of FFEL Consolidation Loans
In deferment, you usually ARE responsible for interest on these loan types:
  • Direct Unsubsidized Loans
  • Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • Federal Family Education Loan (FFEL) PLUS Loans
  • The unsubsidized portion of Direct Consolidation Loans
  • The unsubsidized portion of FFEL Consolidation Loans

Student Loan Forbearance

A period during which your monthly loan payments are temporarily suspended or reduced. Your lender may grant you a forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. Unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loan(s), increasing the total amount you owe.US Department of Education

In plain English:

  • A student loan forbearance postpones or reduces your payments for a while.
  • Your loans will still accrue interest during this time
  • If you do end up accruing interest during this time, you may either pay it off as it comes or allow it to be capitalized.
  • Unpaid interest may be capitalized and will be added to the overall principle balance of your loan.

Is Putting Off Payments Right For You?

If you find yourself unable to make your student loan payments, forbearance or deferment might be a great short-term solution for you. Simple Repayment is dedicated to helping individuals like yourself find the solution that works for them. 

Call us now and we'll discuss your student loan deferment or forbearance options. We will also guide you to the right repayment plan for your unique situation and help you apply. 

Click the button below to get started.


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