Deferment on a student loan means you can temporarily pause your monthly payments for a specific period, usually due to financial hardship, school enrollment, or military service. During most deferments, interest does not accrue on subsidized federal loans, but it does on unsubsidized loans and private loans. Understanding how deferment works can help you manage your debt without damaging your credit.
How Does Student Loan Deferment Work?
When you request a deferment, your loan servicer approves a set time (often 6 to 36 months) during which you don’t need to make payments. You must apply through your loan servicer and provide proof of eligibility, such as enrollment verification or unemployment documentation. Missing payments without approval can lead to delinquency and default, so always get written confirmation.
Deferment is not automatic. You must submit a request, and your servicer will review your situation. If approved, your loan status changes to “deferment” and your credit report shows you are in good standing.
Types of Deferment
- In-school deferment: For students enrolled at least half-time at an eligible school.
- Unemployment deferment: For borrowers who are unemployed or cannot find full-time work.
- Economic hardship deferment: For those receiving public assistance or serving in the Peace Corps.
- Military service deferment: For active-duty service members during qualifying periods.
- Post-enrollment deferment: For recent graduates who used in-school deferment and need time before repayment.
Subsidized vs. Unsubsidized Loans: Interest Differences
The biggest difference depends on the loan type. For subsidized federal loans (like Direct Subsidized Loans), the government pays the interest during deferment. For unsubsidized loans (like Direct Unsubsidized Loans and PLUS loans), interest continues to accrue, and it may be capitalized—added to your principal balance—at the end of the deferment.
| Loan Type | Interest During Deferment | Who Pays? |
|---|---|---|
| Subsidized Federal Loan | Does not accrue | Government pays |
| Unsubsidized Federal Loan | Accrues | Borrower pays or it capitalizes |
| Private Student Loan | Depends on lender policy | Borrower pays unless lender offers grace |
Before applying, check your loan type. If you have multiple loans, some may be subsidized and others not. Your servicer can tell you which loans qualify for interest-free deferment.
Eligibility Requirements for Deferment
Not everyone qualifies. You must meet specific criteria set by the U.S. Department of Education. Common qualifying situations include:
- Enrollment in an eligible college or career school at least half-time.
- Unemployment or inability to find full-time work (for up to 3 years).
- Receiving federal or state public assistance, like SNAP or TANF.
- Serving in the military during a war, military operation, or national emergency.
- Undergoing cancer treatment (for some loans).
You must provide documentation. For example, for unemployment, you may need to show you’re registered with an employment agency. For economic hardship, you may need tax returns or benefit award letters.
How to Apply for Deferment
Contact your loan servicer directly. You can find your servicer by logging into your account on the Federal Student Aid website. Request the appropriate deferment form, fill it out, and submit it with supporting documents. Your servicer must notify you of approval or denial within a reasonable time.
If you have private loans, contact your lender. Private lenders are not required to offer deferment, but many do as a hardship option. Ask about interest rates during deferment and whether you can make interest-only payments to avoid capitalization.
Actionable Tips for a Smooth Application
- Apply before your payment due date to avoid missed payments.
- Keep copies of all documents sent to your servicer.
- Set a reminder to reapply if your deferment is for a limited period.
- Check if you qualify for income-driven repayment instead—it may lower payments to $0 based on your income.
Deferment vs. Forbearance: What’s the Difference?
Deferment and forbearance both pause payments, but they differ in interest. Deferment is often better because, for subsidized loans, interest doesn’t accrue. Forbearance always accrues interest on all loan types, and you must pay it later. Forbearance is generally easier to get, but it costs more over time.
| Feature | Deferment | Forbearance |
|---|---|---|
| Interest on subsidized loans | Paid by government | Accrues to borrower |
| Eligibility requirements | Strict (e.g., school, unemployment) | Broader (e.g., financial difficulty) |
| Maximum duration | Varies by type (e.g., 3 years for unemployment) | Up to 12 months at a time, 3 years total |
| Impact on total cost | Lower for subsidized loans | Higher due to interest capitalization |
If you have subsidized loans, deferment is usually the better choice. If you don’t qualify, forbearance can help in emergencies, but try to pay the interest to avoid growing your balance.
Impact of Deferment on Credit and Loan Forgiveness
Deferment does not hurt your credit score. In fact, it prevents missed payments, which would lower your score. However, it may extend your repayment term because you’ll have more months to pay off the loan. For Public Service Loan Forgiveness (PSLF), deferment periods generally do not count toward the 120 qualifying payments—only forbearance periods from certain types may count. Check with your servicer if you’re pursuing forgiveness.
Also, note that deferment does not erase your loan. You will resume payments after the deferment ends, and your monthly amount may increase if interest capitalized.
When to Consider Deferment vs. Other Options
Deferment is ideal for short-term financial setbacks, like a temporary job loss or returning to school. For long-term low income, income-driven repayment plans may be better because they set payments based on your earnings and may lead to forgiveness after 20 or 25 years. You can also change repayment plans at any time.
Before choosing deferment, use the loan simulator on the Federal Student Aid website to compare costs. That tool shows how much you’d pay under different plans and deferments.
Practical Summary
Deferment on a student loan is a valuable tool to pause payments during qualifying hardships, but it’s not free money—interest may accrue on unsubsidized loans. Always apply through your servicer, understand your loan types, and explore income-driven repayment if you need long-term relief. By staying informed, you can protect your credit and keep your loans manageable.
Frequently Asked Questions
How long can I defer my student loan?
Deferment periods vary by type—unemployment deferment can last up to 3 years, while in-school deferment lasts as long as you are enrolled at least half-time.
Does deferment affect my credit score?
No, a properly approved deferment does not hurt your credit score because you are not missing payments—it shows as a temporary pause in good standing.
Can I defer private student loans?
Private lenders are not required to offer deferment, but many do—contact your lender to ask about options and whether interest continues to accrue.
Do I have to pay interest during deferment?
For subsidized federal loans, the government pays interest; for unsubsidized and private loans, you are responsible, and unpaid interest may be added to your principal.
How do I apply for student loan deferment?
You apply through your loan servicer by submitting the appropriate deferment form and proof of eligibility, such as enrollment verification or unemployment documents.
