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Repaying Your Loans

Deferments and Forbearances

Deferments and forbearances differ in several ways. For example, you’re responsible for the interest that builds up — accrues — while you have a forbearance. With a deferment, it depends on whether your Federal Stafford Loan is subsidized or unsubsidized. If it’s subsidized, you’re not responsible for the interest. You are if the loan is unsubsidized. If at all possible, pay the interest that builds up during your forbearance or deferment. If you don’t, it is capitalized, meaning it’s added to the principal. When interest is capitalized, you end up paying more interest over the long run.

Also, deferments are mandatory, which means your servicer has to grant you a deferment if you qualify. Forbearances can be mandatory or discretionary. Your servicer does not have to grant you a discretionary forbearance.

There are different types of deferments and forbearances, each with an application form. Keep a copy of any form you submit, and document all contacts you have with the holder of your loan. The links below will take you to some of the more common applications.