What Is a Deferment? How It Works and Who Qualifies

A deferment is an approved pause on your loan payments, usually lasting from a few months up to three years, during which your account stays current and you aren’t treated as late or in default. It’s most common with federal student loans, though mortgages and some private loans use similar arrangements under different names. The debt doesn’t go away. And depending on which loan you have, interest can keep building the entire time you aren’t paying.

How the Pause Actually Works

When your servicer grants a deferment, your monthly payment obligation is suspended for a set period. Your account is reported to the credit bureaus as current rather than delinquent, so the pause itself doesn’t hurt your credit score.¹ The balance remains legally owed. When the deferment ends, your regular payment schedule picks back up.

A deferment is not automatic. You have to apply, meet specific eligibility rules, and get written approval from your servicer before any protections apply.² If you just stop paying without approval in place, the loan becomes delinquent and eventually defaults. For federal student loans, default hits after 270 days of missed payments and can lead to wage garnishment of up to 15%, seizure of your tax refund, and major credit damage.³ Getting the deferment approved before you fall behind is the whole point.

When Interest Keeps Growing

Whether interest accrues during a deferment is the single most important thing to understand, because it determines whether the pause is free or quietly expensive.

Subsidized Loans

If you have Direct Subsidized Loans, the federal government pays the interest that accrues during an approved deferment. Your balance stays exactly where it was when the deferment started.⁴ This subsidy is the real advantage of deferment, and it applies only to subsidized loans.

Unsubsidized, PLUS, and Most Private Loans

With Direct Unsubsidized Loans, Direct PLUS Loans, and most private loans, interest accrues every day of the deferment at your loan’s regular rate, even though no payment is due.⁵ You owe that interest. If you don’t pay it as it builds, it capitalizes when the deferment ends, meaning it’s added to your principal. From that point on, you’re paying interest on a bigger number.⁶

Here’s what that looks like. Say you have $30,000 in unsubsidized loans at the current undergraduate rate of 6.39%.⁷ A 12-month deferment adds roughly $1,917 in interest. That gets capitalized at the end, so you now owe $31,917 and every future interest calculation uses the higher balance. Over the remaining life of the loan, the total extra cost is well above the original $1,917.

You can pay interest voluntarily during a deferment, and it’s one of the simplest ways to limit the damage. Even partial payments reduce how much ends up capitalized. Your servicer won’t penalize you for paying while your account is in deferment.²

Who Qualifies for a Federal Student Loan Deferment

Federal student loans offer several deferment categories, each with its own eligibility rules.⁸ You have to fit one of them:

In-school deferment if you’re enrolled at least half-time at an eligible school. For Direct Loans this is usually applied automatically.
Unemployment deferment if you’re receiving unemployment benefits or actively seeking full-time work without finding it. You must register with a qualifying employment agency if one exists within 50 miles of your address. Capped at three cumulative years.⁹
Economic hardship deferment if your monthly income falls below 150% of the federal poverty guideline for your family size, you receive a means-tested benefit like TANF, or you serve in the Peace Corps. Also capped at three cumulative years.¹⁰
Military service deferment for active-duty service members, extending 180 days past demobilization.¹¹
Post-active duty student deferment, which adds 13 months of deferment after service if you were enrolled at least half-time within six months before being called up.¹¹
Cancer treatment deferment while you’re being treated and for six months after, with a physician’s certification.¹²
Graduate fellowship deferment if you’re enrolled in an approved program.
Rehabilitation training deferment if you’re in a rehabilitation training program for people with disabilities.

Older FFEL and Perkins loans have slightly different criteria than Direct Loans. And a change is coming: for loans first disbursed on or after July 1, 2027, the unemployment and economic hardship deferments are being eliminated.¹³ They remain available for loans disbursed before that date.

Deferment vs. Forbearance

Both let you pause payments, but the interest treatment is different. During deferment, interest on subsidized loans is covered by the government. During forbearance, interest accrues on every type of federal loan with no subsidy at all.⁴ If you have subsidized loans and qualify for deferment, deferment is almost always the better choice.

Eligibility also works differently. Deferment requires you to fit a specific category. Forbearance is broader. Some types are mandatory if you meet the criteria; others are discretionary, left to the servicer’s judgment.¹⁴ So forbearance is the usual fallback when no deferment category fits.

How to Request One

Each deferment type has its own form, available from your servicer or at studentaid.gov. The form asks for your identifying information, account details, and the dates you want the deferment to cover.

What you submit with the form depends on which type you’re requesting. For economic hardship, you’ll need documentation of your monthly income, either pay stubs or one-twelfth of your adjusted gross income from your most recent tax return.¹⁰ For unemployment, an award letter if you’re drawing benefits, or confirmation that you’re registered with a qualifying employment agency and seeking work.¹⁵ For cancer treatment, a physician’s signed certification. For military service, copies of your active-duty orders.

Most servicers accept online submissions, which is the fastest route. Nelnet, for instance, processes many online requests within 24 hours; paper submissions or those needing manual review usually take around 10 business days.²

One critical step: keep making your regular payments until you receive written confirmation that the deferment has been approved. If you stop paying while the application is pending and it gets denied, those missed payments count against you.¹⁶

What It Does to Loan Forgiveness

If you’re working toward loan forgiveness, deferment can delay your timeline. The general rule is that months when you’re not making payments don’t count toward forgiveness, so a 12-month deferment pushes your forgiveness date back by about a year.

There are exceptions. Under income-driven repayment plans, months spent in unemployment or economic hardship deferment count toward the required forgiveness timeline.¹³ Those same two deferment types also count toward the 360 payments required for forgiveness under the Department of Education’s new Repayment Assistance Plan.

Public Service Loan Forgiveness is different. It requires 120 qualifying payments made while working for an eligible employer, and deferment months generally don’t count because no payment is being made. The Department of Education ran a one-time adjustment that credited some borrowers for eligible deferment and forbearance periods, but that was an administrative action, not a permanent rule change.¹⁷ If you’re pursuing PSLF, an income-driven repayment plan with low or $0 payments is usually a better move than deferment, because those payments still count toward the 120.

Mortgage Deferment

Mortgages use the term forbearance for a similar pause. If you’re struggling, your servicer can temporarily reduce or suspend payments, but you always owe the full amount back afterward.¹⁸ Repayment can take different forms: a lump sum when the forbearance ends, extra payments tacked onto the end of the loan term, or a short-term increase in your monthly payment to make up the shortfall. Interest usually keeps accruing on the paused amounts, so ask upfront how repayment will be structured before you agree.

If You’re Denied

A denied deferment doesn’t end your options.

Check the denial notice for missing or incomplete documentation. That’s the most common reason for rejection. Fix what was flagged and resubmit.
Ask about forbearance. If no deferment category fits, discretionary forbearance may still be available based on your servicer’s review.¹⁴
Switch to an income-driven repayment plan. If your income is low, your payment can drop to as little as $0, and those $0 payments count toward forgiveness while deferment months typically don’t.
Call your servicer before you miss a payment. Early contact gives you the most flexibility.

Whatever you do, don’t ignore a denial and simply stop paying. A federal student loan that goes 270 days without a payment enters default, which opens the door to wage garnishment, tax refund seizure, and collection costs that significantly increase your total debt.³

1
Nelnet – Federal Student Aid. Credit Reporting
2
Nelnet – Federal Student Aid. FAQ – Deferment and Forbearance
3
Federal Student Aid. Student Loan Default and Collections FAQs
4
Federal Student Aid. What Is the Difference Between Loan Deferment and Loan Forbearance
5
Consumer Financial Protection Bureau. How Does Interest Accrue While I Am in School
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Nelnet – Federal Student Aid. Interest Capitalization
7
Federal Student Aid Partners. Interest Rates for Direct Loans First Disbursed Between July 1, 2025 and June 30, 2026
8
Federal Student Aid. Student Loan Deferment
9
Federal Student Aid. Unemployment Deferment Request
10
Federal Student Aid. Economic Hardship Deferment Request
11
eCFR. 34 CFR 685.204 Deferment
12
Federal Student Aid. Cancer Treatment Deferment Request
13
Federal Register. Reimagining and Improving Student Education
14
Federal Student Aid. Am I Eligible for a Forbearance
15
Nelnet – Federal Student Aid. Acceptable Forms of Documentation
16
Federal Student Aid. Deferment and Forbearance Fact Sheet
17
Federal Student Aid. How to Manage Your Public Service Loan Forgiveness (PSLF) Progress
18
Consumer Financial Protection Bureau. What Is Mortgage Forbearance