What is the difference between forbearance and a deferment?
A deferment is an entitlement, meaning it must be granted if you qualify. Most forbearance is granted at a lender’s discretion. During deferment, the federal government pays interest that accrues on a subsidized loan. The borrower is responsible for interest that accrues during a deferment on an unsubsidized loan as well as during forbearance. Additionally, the interest that accrues becomes “capitalized.” Capitalization is when accrued interest and the principal balance are added together. Then interest accrues on that new total. Remember, you must request a deferment or forbearance in order for it to be granted. The lender or servicer does not automatically grant deferments or forbearance.
Related Questions
- I recently sent in a deferment/forbearance request to Edfinancial Services. Will my deferment/forbearance automatically be applied on my loan(s) that was transferred to the Department of Education?
- Who do I contact to get more information regarding Loan Repayment, Deferment or Forbearance?
- What is the difference between a deferment and a forbearance on my Federal loans?
