Is it better to request a deferment or a forbearance for your student loans?

With student loan repayment, many borrowers may encounter financial hardship that makes keeping their repayment obligations difficult. Options such as deferment and forbearance can help borrowers by allowing them to stop payment for a limited time if they qualify. 

If you are considering requesting a deferment or forbearance, here is some need-to-know information to help you choose, based on your own financial situation. Both options vary in their length, qualifications, interest accrual, and availability. Neither option affects your credit. 

Deferment

Borrowers who have Perkins loans, subsidized federal student loans, are unemployed, or dealing with significant financial hardship would be better off considering a deferment.

The length of a deferment varies by deferment type. Some last three years, while others are available as long as you qualify. Different deferments have different forms, so you would need to check with your lender to confirm which type of deferment you may qualify for – if any. If you have deferment time available, it should be granted if you meet the eligibility criteria. 

Forbearance

Forbearance is a better option if your financial troubles are temporary and if you do not qualify for a deferment. Forbearances can not be granted for more than 12 months at a time, and a specific qualifying event is usually not necessary. Unlike deferments, there is a single “general forbearance” form, though many loan servicers can grant forbearance over the phone. Forbearance is granted at your servicer’s discretion, although it is sometimes mandatory.

Income-driven repayment

Deferment and forbearance may stop borrowers from going into default on their loans, but they are not good solutions in the long run. If you don’t expect your financial situation to improve soon, you might want a repayment plan that is income-driven rather than halting repayment altogether.

Income-driven repayment plans go by current income, so it would calculate your monthly payments based on your earnings, which in some cases would mean payments could be as little as $0. While paying less could result in the interest increasing, income-driven repayment options have the benefit of forgiveness after 20 or 25 years.

If you are experiencing financial hardship, please contact your loan servicer to discuss these options.