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

A loan deferment and a loan forbearance are two options available to North Carolina residents who have taken out student loans. Both of these options provide temporary relief from making loan payments, but there is a key difference between the two. A loan deferment allows borrowers to temporarily pause loan payments for a certain period of time. Under the terms of a deferment, the federal government may choose to pay all or part of the interest on the loan. This option is generally available for borrowers who are enrolled in school, unemployed, or experiencing financial hardship. In contrast, loan forbearance does not pause loan payments, but only reduces the amount that a borrower must pay. This can be a better option for borrowers who are in a financial crunch, as it allows them to make payments on their loan even if it is at a reduced rate. However, during a period of forbearance, the borrower is responsible for all interest that accrues on the loan. In summary, a loan deferment and a loan forbearance are two options available to North Carolina residents who have taken out student loans. A deferment pauses loan payments temporarily, while a forbearance only reduces the payments that must be made. While both options are available to borrowers in certain financial situations, the terms and conditions of each are different.

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

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