The Difference Between Loan Deferment and Forbearance

Some people use the two terms interchangeably, but that can lead to misconceptions because the two aren’t actually the same.

Multiple arrows drawn on a blackboard.

Image by Gerd Altmann from Pixabay

Deferment

To boil it down and really simplify it: deferment is delaying the repayment of a loan until after the student borrower graduates. While in school, they can focus on their studies. Students do not worry about juggling a job and finances while working hard for their education. Many students (if not most) choose to defer their student loans. After their post-graduate grace period is up, start making payments once they’ve found a job.

There are, of course, differences in the logistics from loan to loan. Each is different, and so each has different rules or requirements in order for a student to defer. Ask your provider about the conditions of your own loan, and the possibility of deferment. Students should always seek deferment first before forbearance.

During deferment, the student’s credit score is protected, and the federal government will help pay the interest that builds on the loan.

Forbearance

The major difference between deferment and forbearance is the role of the government. In the latter option, the federal government will not help pay the interest that accrues with a loan. It is not an entitlement. Forbearance, therefore, is typically pursued by students who—for whatever reason—do not qualify for deferment.

Again, speak with your loan provider and ask them what the conditions of your loan are, and what your options are. Each loan and borrower have different circumstances, so it is always important to clarify.

Use College Raptor to discover personalized college matches, cost estimates, acceptance odds, and potential financial aid for schools around the US—for FREE!

 

 

Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.99%* +
Fixed APR: 2.98%* +
Undergraduate and Graduate
VISIT EARNEST
Lendkey company logo.
Variable APR: 1.90%* +
Fixed APR: 2.95%* +
Undergraduate, Graduate, Parent PLUS
VISIT LENDKEY
Credible company logo.
Variable APR: 2.13%* +
Fixed APR: 2.58%* +
Undergraduate and Graduate
VISIT CREDIBLE
Laurel road company logo.
Variable APR: 1.89%* +
Fixed APR: 2.50%* +
Undergraduate and Graduate
VISIT LAUREL ROAD
Commonbond company logo.
Variable APR: 2.46%* +
Fixed APR: 2.59%* +
Undergraduate, Graduate, Parent PLUS
VISIT COMMONBOND
Fixed APR: 2.24%* +
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.95%* +
Fixed APR: 2.55%* +
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94%* +
Fixed APR: 2.99%* +
Undergraduate and Graduate
VISIT College Ave
Variable APR: 2.39%* +
Fixed APR: 2.47%* +
Undergraduate and Graduate, Parent PLUS
VISIT ELFi

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

Leave a reply

Your email address will not be published. Required fields are marked *