What deferment does and who can use it
Deferment pauses your loan payments for a set period — usually six months to three years — without marking you as delinquent. During deferment, you stop making monthly payments, and the loan servicer halts collection activity. For federal loans, the government typically covers the interest that accrues on subsidized loans during this time; on unsubsidized loans, interest keeps building and gets added to your balance when deferment ends.
Deferment is not the same as forbearance. Forbearance also pauses payments but is shorter-term (usually three to six months) and is meant for temporary hardship. Deferment is for specific circumstances: unemployment, economic hardship, enrollment in school at least half-time, participation in certain military service programs, or being in a graduate fellowship or rehabilitation training program. Your loan servicer determines which circumstances apply to your loan type.
Private student loans rarely offer deferment. If you have private loans, contact your lender directly to ask what options exist; most will only discuss forbearance or modified payment plans. The rest of this article covers federal loans, which have structured deferment programs.
Key Takeaways
- Federal deferment pauses payments for six months to three years depending on the reason, and the government pays interest on subsidized loans during that time.
- You must request deferment from your loan servicer and provide documentation of the reason — unemployment, economic hardship, school enrollment, or military service — before the pause begins.
- Interest on unsubsidized loans continues to accrue during deferment and gets added to your principal balance when the pause ends, making your loan larger.
- Deferment does not forgive debt and does not count toward Public Service Loan Forgiveness; the time paused is not time working toward forgiveness.
- If you are unemployed, you can request unemployment deferment for up to three years total, but you must recertify every six months to keep it active.
Types of federal deferment and how long each lasts
The most common deferment is unemployment deferment, available if you are receiving unemployment benefits or have been unemployed for at least 14 days. This deferment lasts six months at a time and can be renewed up to three years total. You must recertify every six months by submitting proof of continued unemployment or enrollment in an approved job-training program. If you stop recertifying, the deferment ends and payments resume.
Economic hardship deferment covers situations where you cannot afford payments due to financial strain — job loss, reduced income, medical bills, or other circumstances. This deferment lasts one year and can be renewed up to three years total. You will need to provide documentation of the hardship, such as a letter from your employer showing reduced hours, a medical bill, or a statement of your income and expenses. The servicer reviews your situation and decides whether to grant it.
In-school deferment is available if you are enrolled at least half-time in an accredited college, university, or approved vocational program. This deferment lasts as long as you remain enrolled plus a six-month grace period after graduation or withdrawal. You must provide proof of enrollment, usually through your school's registrar. This deferment is automatic for some Direct Loans if your school reports your enrollment status to the servicer.
Military service deferment covers active duty service members and those in certain military-related programs. The length depends on the program — active duty deferment typically lasts the length of service plus six months. You will need military documentation, such as orders or a letter from your commanding officer.
How to request deferment from your servicer
Contact your loan servicer directly — not the Department of Education. Your servicer is the company that sends you monthly statements and collects payments. If you do not know who your servicer is, log into studentaid.gov, sign in with your FSA ID, and check the "My Loans" section. Each loan will show the servicer's name and contact information.
Call or visit the servicer's website and ask for a deferment request form. Most servicers offer online portals where you can request deferment without calling. The form will ask for the reason (unemployment, hardship, school enrollment, or military service) and require supporting documentation. For unemployment, you may need a letter from your state unemployment office or a statement showing your benefits. For hardship, you may need pay stubs, a job loss letter, or a written explanation of your situation. For school enrollment, you need proof from your registrar. For military service, you need military orders or a service letter.
Submit the form and documentation to your servicer. Most servicers accept documents by mail, email, or through their online portal. Keep a copy of everything you submit. The servicer will review your request and send you a decision letter within two to four weeks. If approved, the letter will state the deferment start date, end date, and what happens when it expires. If denied, the letter will explain why and may suggest forbearance as an alternative.
If your deferment is set to expire and you still need payment relief, request renewal at least 30 days before the end date. Do not wait until the deferment expires, because payments will resume immediately if you do not have an active deferment or forbearance in place.
What happens to interest during deferment
On subsidized federal loans — typically Subsidized Stafford Loans or older Subsidized Federal Family Education Loans — the government pays the interest that accrues during deferment. Your balance does not grow. When deferment ends, you owe exactly what you owed when it started.
On unsubsidized federal loans — Unsubsidized Stafford Loans, PLUS Loans, and most newer loans — interest accrues every day during deferment. The servicer adds this unpaid interest to your principal balance when the deferment period ends. This process is called capitalization. If you defer for one year on a $30,000 unsubsidized loan at 6% interest, roughly $1,800 in unpaid interest gets added to your balance, making it $31,800. You then owe interest on that larger amount going forward.
You can avoid capitalization on unsubsidized loans by making interest-only payments during deferment, even if you are not required to. Contact your servicer to ask about this option. Some servicers allow you to pay interest while deferring principal, which keeps your balance from growing. This is optional and costs money out of pocket, but it saves you money in the long run if you can afford it.
Deferment and Public Service Loan Forgiveness
Time spent in deferment does not count toward the 120 may have access to payments required for Public Service Loan Forgiveness (PSLF). If you are working toward PSLF and you defer your loans, the clock pauses. You will need to make up those months after deferment ends to reach 120 payments.
This matters if you are close to forgiveness. If you have 110 may have access to payments and you defer for six months, you will still need 10 more payments after deferment ends — the six months of deferment do not count. Plan deferment carefully if you are pursuing PSLF. In some cases, forbearance may be a better choice because it also pauses payments but is shorter, so you lose less time toward forgiveness.
If you are not pursuing PSLF, this does not affect you. Standard deferment simply delays when you have to pay; it does not reduce the total amount owed or affect forgiveness programs other than PSLF.
What happens when deferment ends
When your deferment period expires, your servicer will send you a notice stating the end date and your new payment amount. Payments resume on the date listed in the notice. If you have an unsubsidized loan, your payment amount may be higher than before because interest has been capitalized and added to your balance.
If you cannot resume payments when deferment ends, contact your servicer before the end date to request forbearance, a new deferment period, or an income-driven repayment plan. Do not wait until payments are due. If you miss a payment after deferment ends, your loan goes into delinquency, which damages your credit and can trigger collection activity.
If you are still unemployed or in hardship when deferment expires, you can request renewal. For unemployment deferment, you must recertify your unemployment status. For hardship deferment, you must provide updated documentation showing the hardship continues. The servicer will review your request and decide whether to grant another deferment period.
Deferment versus forbearance and income-driven plans
Deferment, forbearance, and income-driven repayment plans all pause or reduce payments, but they work differently. Forbearance is shorter (usually three to six months) and is meant for temporary hardship. Interest accrues on all loans during forbearance, even subsidized ones. Forbearance is easier to get — you do not always need documentation — but it costs more because interest is not covered. Use forbearance when you need a short pause and expect to resume full payments soon.
Income-driven repayment plans do not pause payments; instead, they lower your monthly payment based on your income. Plans like SAVE, PAYE, and IBR can reduce your payment to as low as $0 per month if your income is very low. Interest still accrues, but you are making some progress on the loan. Use income-driven plans if you expect to be in financial strain for years, not months, or if you are pursuing PSLF.
Deferment is best when you have a specific, temporary reason — unemployment, school enrollment, or documented hardship — and you expect to resume full payments within one to three years. It covers interest on subsidized loans and does not require you to make any payments. The trade-off is that it does not count toward PSLF and interest on unsubsidized loans still accrues.
Frequently Asked Questions
Can I defer my loans if I am not unemployed or in school?
Yes, through economic hardship deferment. You do not have to be unemployed; you can defer if you are working but cannot afford payments due to medical bills, reduced income, family expenses, or other financial strain. You will need to document the hardship with pay stubs, bills, or a written explanation. Contact your servicer to request an economic hardship deferment form.
What if my deferment request is denied?
The servicer will send a denial letter explaining why. Common reasons include not meeting the criteria for the deferment type you requested or not providing required documentation. If denied, ask your servicer about forbearance or an income-driven repayment plan as alternatives. You can also reapply for deferment if your circumstances change.
Do I have to pay interest during deferment on unsubsidized loans?
No, you are not required to pay interest during deferment. Interest accrues automatically and gets added to your balance when deferment ends. However, you can choose to pay interest-only during deferment to prevent capitalization. Ask your servicer if this option is available on your loans.
How many times can I defer my loans?
For unemployment deferment, you can defer up to three years total, in six-month increments, as long as you recertify every six months. For economic hardship deferment, you can also defer up to three years total, in one-year increments. For in-school deferment, you can defer as long as you are enrolled plus six months after graduation. Military service deferment lasts the length of service plus six months.
Will deferment hurt my credit score?
No. Deferment does not appear on your credit report as a negative mark. Your loan is not delinquent during deferment; it is in an approved pause status. Your credit score is not affected. However, if you miss a payment after deferment ends, that will hurt your credit.