Understanding Loan Deferment, Forbearance and Discharge


A deferment is a period of time during which no payments are required, and interest does not accrue (accumulate) unless you have an unsubsidized direct loan. The most common loan deferment conditions are enrollment in school at least half time, inability to find full-time employment (for up to three years) and economic hardship (for up to three years).


If you temporarily can’t meet your repayment schedule, but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specific period of time.

Forbearance occurs when your lender or loan-servicing agency agrees to either temporarily reduce or postpone your student loan payments. Interest continues to accrue (accumulate), however, and you are responsible for paying it, no matter what kind of loan you have.

There are certain mandatory forbearances. Examples include borrowers who:

  • Are in a medical or dental internship or residency;

  • Have student loan payments that are 20 percent or more of their monthly income;

  • Have payments being made for them by the Department of Defense.

Contact your lender or loan-servicing agent for more information on the mandatory forbearance benefit.


Loan discharge refers to the cancellation of a loan, even one in default, due to school closure, false certification, your death or total and permanent disability.

Cancellation or sometimes “forgiveness” of a loan is based on the borrower performing certain types of service, such as teaching in a low-income school. A defaulted loan cannot be canceled based on qualifying service (e.g., teaching).