What is the difference between a deferment and a forbearance?

Both a deferment and forbearance will temporarily suspend your monthly payment. To qualify for a deferment you must meet specific criteria. To qualify for forbearance you must be willing but unable to make your monthly payments due to a temporary financial hardship.

The major difference between the two is as follows:

• If your loans are Subsidized and you are in a deferment, the interest is paid by the Federal Government.
• If your loans are Unsubsidized, the interest that accrues during a deferment or forbearance period is your responsibility. If the interest is unpaid at the end of the deferment or forbearance period, it capitalizes (is added to the principal balance).