Payment deferred means you stop making monthly payments on your student loan for a set period, but interest keeps accruing
When your loan servicer marks your account as deferred, you get a pause on the monthly payment obligation itself. You do not have to send money that month or for however long the deferment lasts. The catch: on most federal loans, interest continues to pile up during that time, and it gets added to what you owe when deferment ends.
Deferment is different from forbearance, which also pauses payments but has different rules about interest. It is also different from income-driven repayment plans, which lower your payment to match your income but do not stop it entirely. Deferment is a temporary halt, usually lasting 6 to 36 months depending on the reason and the loan type.
The key thing to understand: deferment does not erase what you owe. It postpones it. When the deferment period ends, you resume payments, and your balance is higher because of the accrued interest.
Key Takeaways
- Deferment pauses your monthly payment obligation, but interest on unsubsidized loans continues to accrue and gets added to your balance.
- Federal student loans have specific deferment reasons: unemployment, economic hardship, enrollment in school, military service, and a few others—you cannot defer for any reason you choose.
- Subsidized loans do not accrue interest during deferment, but unsubsidized and PLUS loans do, which means your total debt grows.
- Deferment periods are usually 6 to 36 months, and you must request it through your loan servicer before your payment is due.
- When deferment ends, your payment resumes at the same amount unless you change your repayment plan.
How deferment affects what you owe
The impact on your balance depends on the loan type. Subsidized federal loans (Stafford loans for undergraduates) do not accrue interest during deferment. The government covers the interest while you are paused. Your balance stays the same when deferment ends.
Unsubsidized federal loans (Stafford loans for graduates, PLUS loans, and some undergraduate loans) accrue interest every day during deferment. That interest is not paid by the government. At the end of deferment, the accrued interest is capitalized—added to your principal balance. You then owe interest on the interest, which compounds your debt.
Example: You have a $30,000 unsubsidized loan at 6% interest and defer for 12 months. During that year, roughly $1,800 in interest accrues. When deferment ends, your balance is now $31,800, and your monthly payment is calculated on that higher amount.
Reasons you can request deferment
Federal student loans allow deferment only for specific circumstances. You cannot defer simply because you want to pause payments. The servicer will ask you to prove the reason.
Common deferment reasons include: unemployment (you must be actively looking for work), economic hardship (income below 150% of the poverty line or other hardship criteria), enrollment in school at least half-time, military service, Peace Corps service, and participation in a medical or dental residency. Some loans also allow deferment for parenthood or for being a new parent.
If your reason does not fit these categories, you may still have options—forbearance, income-driven repayment, or a temporary payment reduction—but deferment itself will not be available.
How to request deferment and what happens next
Contact your loan servicer directly. You can find your servicer's name and contact information on your loan documents or by logging into studentaid.gov. The servicer will send you a deferment request form, which varies by servicer but usually asks for your reason, dates, and supporting documentation.
For unemployment deferment, you may need to provide proof that you are registered with a state employment agency or actively job-hunting. For economic hardship, you may need recent pay stubs or tax returns showing your income. For school enrollment, you need a letter from the school confirming you are enrolled at least half-time.
Once you submit the form with documentation, the servicer typically processes it within 2 to 4 weeks. During that time, keep making your regular payment unless the servicer tells you to stop. If your request is approved, the servicer will confirm the deferment start and end dates and adjust your account.
What happens when deferment ends
Your loan servicer will send you a notice 30 to 60 days before deferment ends. Your regular monthly payment resumes on the date stated in that notice. If you have an unsubsidized loan, your new payment may be higher than before because your balance grew from capitalized interest.
If you cannot resume payments when deferment ends, contact your servicer immediately. You may be able to request another deferment period if you still meet the criteria, or you can switch to a different repayment plan. Do not simply stop paying—that triggers default, which damages your credit and can lead to wage garnishment.
Some servicers allow you to request deferment renewal before the current period expires, which prevents a gap in your protection. Check your account online or call your servicer to see if renewal is an option.
Deferment versus forbearance: which one applies to you
Both pause your payment, but they work differently. Deferment is for specific hardships and has defined time limits. Forbearance is broader—you can request it for almost any financial hardship—but it is usually shorter (3 to 6 months at a time) and you may have to request it repeatedly.
On subsidized loans, deferment is better because interest does not accrue. On unsubsidized loans, both options result in accrued interest, so the choice depends on how long you need the pause. Forbearance may be faster to set up if your servicer has a streamlined process, but deferment may last longer if you may have access to.
If you do not meet deferment criteria, forbearance is your fallback. If you meet deferment criteria and have unsubsidized loans, compare the length of each option—a longer deferment might actually cost less in the long run than repeated forbearance requests because you are not restarting the accrual clock as often.
Interest capitalization and how it affects your long-term debt
Capitalization is the moment accrued interest gets added to your principal balance. It happens automatically at the end of deferment on unsubsidized loans. From that point forward, you pay interest on the new, higher balance.
If you defer for 12 months on a $30,000 unsubsidized loan at 6% interest, you accrue about $1,800. When deferment ends, that $1,800 is capitalized. Over the remaining 10 years of a standard repayment plan, you will pay roughly $600 more in interest because of that capitalization.
To minimize the impact, some borrowers make interest-only payments during deferment if they can afford it. This prevents capitalization. Check with your servicer about whether you can make voluntary payments during deferment without triggering early payoff penalties.
Frequently Asked Questions
Does deferment hurt my credit score?
No. Deferment is an approved pause, not a missed payment. Your credit report will show the account as deferred, but it does not count as late or in default. Your credit score should not drop because of deferment itself. However, if you stop paying without requesting deferment, that will hurt your score.
Can I defer my private student loans?
Private loans do not have deferment in the federal sense. Private lenders set their own rules. Some offer forbearance or temporary payment reductions, but you have to ask your lender directly. The terms vary widely, and interest usually accrues during any pause. Check your loan documents or contact your lender to see what options exist.
What if I defer but then get a job—do I have to end deferment early?
No. Deferment lasts until the end date your servicer set, even if your circumstances change. You can request early termination if you want to resume payments, but you are not required to. However, if you got a job and can afford payments, ending deferment early saves you interest on unsubsidized loans.
Can I defer multiple times in a row?
Yes, but there are limits. Unemployment deferment is limited to a total of 3 years across your lifetime. Economic hardship deferment is limited to 3 years total. Other deferment reasons have their own caps. Once you hit the limit, you cannot defer again for that reason, though you may be able to use forbearance or switch to an income-driven plan.
Will deferment affect my Public Service Loan Forgiveness progress?
Time spent in deferment does not count toward the 120 may have access to payments required for Public Service Loan Forgiveness. Only payments made under a may have access to repayment plan count. If you are pursuing forgiveness, deferment delays your progress. Consider forbearance or income-driven repayment as alternatives if you need a payment break.