Payment deferred stops your monthly payment obligation without defaulting your loan

When your student loan is in deferment, you are not required to make monthly payments during that period. The loan remains active and in good standing with your lender — you are not behind, and it does not damage your credit. The key difference from other payment pauses is that interest continues to accrue on unsubsidized loans, meaning the amount you owe grows even though you are not paying.

Deferment is a formal status your lender grants, usually for a specific reason and a defined length of time. It is not the same as forbearance (where you can pause payments but interest still accrues and you may owe it later) or income-driven repayment plans (where your payment amount changes based on what you earn). Deferment is a pause, not a reduction.

Key Takeaways

  • Deferment pauses your payment obligation without marking you as delinquent, so your credit score is not harmed during the deferment period.
  • Interest on unsubsidized loans continues to accrue during deferment, so the total amount you owe will be higher when payments resume.
  • Deferment requires a reason — usually enrollment in school, economic hardship, unemployment, or military service — and your lender must approve it.
  • When deferment ends, your payment obligation resumes in full, and your monthly payment amount may be recalculated based on your new loan balance.

How deferment affects what you owe

The way deferment changes your balance depends on the type of loan. On subsidized federal loans (typically undergraduate Direct Loans), the government pays the interest that accrues during deferment, so your balance does not grow. On unsubsidized federal loans (available to undergraduates and graduates) and on PLUS loans, interest accrues and is added to your principal balance. If you do not pay that accrued interest when deferment ends, it capitalizes — meaning it becomes part of the amount you owe and you pay interest on the interest.

For example: you have an unsubsidized loan with a $20,000 balance and a 6% interest rate. You enter deferment for one year. During that year, roughly $1,200 in interest accrues. When deferment ends, your balance is now $21,200. If you do not pay the $1,200 before your next payment is due, it capitalizes and your new interest calculation is based on $21,200.

Private student loans handle deferment differently — some allow it, some do not, and the terms vary by lender. Check your promissory note or contact your servicer to know whether interest accrues on your specific loan during deferment.

Common reasons your lender will grant deferment

Federal student loan servicers recognize deferment for specific circumstances. In-school deferment applies when you are enrolled at least half-time in an undergraduate or graduate program. Economic hardship deferment is available if you are unemployed, underemployed, or facing financial difficulty — the definition varies by servicer, but generally means your income is below 150% of the federal poverty line or you are receiving certain public benefits. Unemployment deferment covers periods when you are actively seeking work and receiving unemployment benefits.

Military service deferment applies if you are on active duty or in the Peace Corps. Rehabilitation training deferment covers participation in a state vocational rehabilitation program. Some servicers also offer deferment for temporary medical conditions or other hardships, though these are less common and require documentation.

You must request deferment — it does not happen automatically. Your servicer will ask for proof of your reason (a school enrollment verification, unemployment paperwork, military orders, or a signed statement of hardship). The approval process usually takes two to four weeks.

The difference between deferment and forbearance

Both deferment and forbearance pause your monthly payment, but they work differently. In deferment, interest on subsidized loans does not accrue (the government covers it), and you must have a may have access to reason. In forbearance, interest accrues on all loans, and you can request it for almost any hardship — the lender has more discretion to grant it.

Deferment is typically the better choice if you may have access to, because you avoid the interest buildup on subsidized loans. Forbearance is useful if you do not meet deferment criteria or if you need a longer pause — forbearance can be granted for up to three years total, while deferment periods vary by reason. Both protect your credit during the pause, but both require you to contact your servicer to request the pause.

What happens when deferment ends

Your servicer will notify you before deferment expires, usually 30 to 60 days in advance. Your payment obligation resumes on the date deferment ends — there is no grace period. Your monthly payment amount is recalculated based on your current loan balance (which now includes any accrued interest that capitalized) and your repayment plan.

If you cannot resume payments when deferment ends, you can request forbearance, enter an income-driven repayment plan, or explore for another deferment period if you still meet the criteria. If you do nothing and miss a payment, the loan becomes delinquent and your credit is affected.

Some borrowers use deferment strategically — for example, staying in school longer to delay payments, or using it during a job transition. Others find that the accrued interest makes the loan larger and harder to repay when deferment ends. Understanding what your balance will be when payments resume helps you plan.

How to request deferment on your federal loan

Contact your loan servicer directly — the company that sends your bill and processes your payments. You can find your servicer's name and contact information on your loan documents or by logging into studentaid.gov and checking your loan details. Most servicers have deferment request forms on their websites, or you can call and request one by phone.

You will need to provide proof of your reason for deferment. For in-school deferment, your school's registrar can provide an enrollment verification. For unemployment, you will need documentation from your state unemployment office. For economic hardship, you may need recent pay stubs, tax returns, or a signed statement. For military service, you will need military orders or a statement of service.

Submit the completed form and supporting documents to your servicer. Processing typically takes two to four weeks. Your servicer will send you a confirmation letter stating the deferment start date, end date, and how it affects your loan. Keep this letter for your records.

Frequently Asked Questions

Does deferment hurt my credit score?

No. Deferment is an approved status, not a missed payment. Your credit report will show the loan is in deferment, but this does not lower your score. Your credit is only affected if you miss a payment or default on the loan.

Can I make payments while my loan is in deferment?

Yes. You can pay toward your loan at any time during deferment, even though you are not required to. Paying during deferment reduces the principal balance and the amount of interest that accrues on unsubsidized loans. Some borrowers do this to avoid capitalization when deferment ends.

What if I need to extend deferment beyond the approved end date?

Contact your servicer before deferment expires and request an extension. If you still meet the criteria (still in school, still unemployed, still in military service), your servicer can usually grant another deferment period. If you do not may have access to for another deferment, you may be able to enter forbearance instead.

Does deferment work the same way for private student loans?

No. Private lenders set their own deferment rules. Some offer it, some do not. If your private lender does offer deferment, the terms, interest accrual, and approval process may differ from federal loans. Check your loan documents or contact your private lender directly to understand your options.