The main difference is how interest is handled: with deferment, interest may not accrue on certain types of loans (like subsidized federal student loans), while with forbearance, interest almost always keeps accruing on all loans during the pause in payments.

Quick Scoop

  • Deferment
    • Temporarily pauses your loan payments.
* For eligible subsidized federal loans, the government covers the interest, so your balance may not grow during the deferment period.

* Usually requires meeting specific conditions, like being in school, unemployment, economic hardship, military service, or certain medical situations.
  • Forbearance
    • Also pauses or reduces payments for a limited time.
* Interest continues to accrue on **all** loan types, and that interest can be added to your principal (capitalized), increasing what you owe long-term.

* Often granted for general financial hardship and is more discretionary for the lender or loan servicer.

Think of it this way

  • Deferment = “Pause with less interest pain” (when you have qualifying subsidized loans).
  • Forbearance = “Pause now, but your balance quietly grows in the background.”

If you qualify for both, deferment is typically the more cost-effective option because of the potential interest relief, while forbearance is more of a short-term emergency safety valve when deferment isn’t available.

Bottom note: Information gathered from public forums or data available on the internet and portrayed here.