What is the difference between a loan deferment and a loan forbearance?

A loan deferment is when a student is allowed to put off making payments on their student loans for a certain period of time. During this period, a student’s loan will not accrue any interest. A deferment is typically granted when a student is enrolled in school at least half-time, experiencing economic hardship, or unemployed. A loan forbearance is slightly different. This type of relief from making student loan payments allows a borrower to postpone or reduce payments for a short period of time. Like a deferment, the loan will not accrue interest during the forbearance period. Unlike deferment, however, the loan still shows up on the borrower’s credit report. In California, borrowers may be granted loan forbearances if they are facing economic hardship or have a medical condition that prevents them from repaying the loan. It is important to note that not all types of loans are eligible for either forbearance or deferment. In conclusion, the main difference between a loan forbearance and a deferment is the way they are reported to the credit bureau. A deferment does not appear on the borrower’s credit report, while a forbearance does. Both allow a borrower to postpone payments, but only a deferment eliminates the interest that accrues during the period of relief.

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What is the difference between a loan deferment and a loan forbearance?

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