Deferments and forbearances are only temporary fixes. They are used mainly to keep the loan out of default. A deferment occurs when the lender temporarily allows the borrower to stop making payments. For subsidized loans, the federal government pays the loan’s interest while the loan is deferred. For unsubsidized loans, the interest continues to accrue during the deferment period. Deferment rights vary depending on the type of the loan and when the loan obligation was incurred. Deferments are usually applied for with a written application. You may qualify for a deferment if you meet one of the following conditions:
- At least half-time school enrollment
- Graduate fellowship study
- Rehabilitation training program
- Unemployment
- Economic hardship
- Military service and post-active-duty
If you do not qualify for a deferment, you may qualify for loan forbearance to temporarily stop making your payments. All student loans in forbearance, subsidized and unsubsidized, accrue interest. Most forbearances are subject to lender discretion and the requests can be made verbally over the phone.