Deferment

What It Means

Deferment is a period when you're allowed to stop making payments on a federal student loanFederal student loanA student loan made by the U.S. Department of Education, with a fixed rate set by law and federal repayment plans and protections. See more because you meet a qualifying condition, such as going back to school at least half-time or serving on active military duty. On Direct Subsidized Loans you aren't charged interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more during deferment; on unsubsidized loans the interest keeps building and you still owe it. Your loan servicer grants it, and it differs from forbearanceForbearanceA temporary pause or reduction in loan payments that a lender or servicer allows, while interest usually keeps building on the balance. See more, where interest builds on every loan.

How People Say It

• "I put my loans in deferment while I'm in grad school."
• "My deferment ends in June."
• "Is it deferred or in forbearance?"

The Breakdown

An example family. Dana has $12,000 in Direct Subsidized Loans and $15,000 in Direct Unsubsidized Loans at an example 6%. She goes back to school half-time for a year and gets an in-school deferment. Her subsidized loans cost nothing that year. The unsubsidized loans build about $900 of interest ($15,000 × 6%), which she owes when the deferment ends.

Where it goes wrong. Dana assumed "deferred" meant "frozen" across all her loans and paid nothing toward the interest. She also missed the letter saying her deferment had ended, and a payment went unpaid. A deferment lasts only as long as the reason behind it, and payments are due again once it ends.

What to watch for.

• Which of your loans are subsidized. Your account on studentaid.gov lists each one.
• The end date of the deferment, and what your payment will be the month after.
• When your loans were made. For loans made on or after July 1, 2027, the Department of Education's final rule ends the economic hardship and unemploymentUnemployment benefitsWeekly payments from a state's unemployment insurance program to eligible workers who lose a job through no fault of their own, with rules set by each state. See more deferments; in-school, military service and cancer treatment deferments stay.
• Whether an income-driven plan would work better than pausing, since those payments can count toward forgiveness.

Good to Know

Deferment is a federal student loan protection. The CFPB points out that private student loansPrivate student loanA student loan from a bank or other private lender, priced by your credit and governed by its contract rather than federal student loan rules. See more, and federal loans refinanced into a private loan, don't carry federal deferment rights; any pause on those is up to the lender and your contract. Keep paying until your servicer confirms in writing that the deferment is approved, so a gap doesn't turn into a missed paymentLate paymentA payment that reaches the lender after its due date; on credit reports, one that's 30 days or more past due. See more. Studentaid.gov lists the current types of deferment and who qualifies for each.

Related Terms and Categories

• Forbearance

  A temporary pause or reduction in loan payments that a lender or servicer allows, while interest usually keeps building on the balance.

• Federal student loan

  A student loan made by the U.S. Department of Education, with a fixed rate set by law and federal repayment plans and protections.

• Income-driven repayment

  A federal student loan repayment plan that sets your monthly payment from your income and family size instead of from your balance.

• Loan default

  Failing to repay a loan as the contract requires, usually after missed payments, which lets the lender use stronger ways to collect.

• Student loan

  Money borrowed to pay for college or career school, repaid with interest after you leave school; it comes from the federal government or a private lender.

• Private student loan

  A student loan from a bank or other private lender, priced by your credit and governed by its contract rather than federal student loan rules.

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