Deferment vs Forbearance: Which One Actually Costs You Less in 2026?

Deferment is usually the cheaper of the two, because on Direct Subsidized Loans the government pays your interest during a deferment, while interest accrues on every loan type during a forbearance. But in 2026 the more useful question is whether you should pause at all. Under the Repayment Assistance Plan (RAP), the minimum monthly payment is $10, unpaid interest is waived in months you pay on time, and those months count toward the 360-payment cancellation clock. Pausing often costs more than paying a very small amount.

This matters at scale. As of June 30, 2024, about 21 percent of the $1.4 trillion Direct Loan portfolio, roughly $302 billion, sat in deferment or forbearance rather than in repayment (Congressional Research Service, IF12896).

What is the difference between deferment and forbearance?

Deferment and forbearance both let you temporarily stop making monthly payments on your federal Direct Loans. The difference is who pays the interest and how you qualify. Deferment requires you to meet a specific statutory condition, such as unemployment, economic hardship, cancer treatment, or at least half-time enrollment, and on Direct Subsidized Loans the government covers the interest. Forbearance is broader and easier to get, but interest accrues on every loan type.

	Deferment	Forbearance
How you qualify	About 10 defined categories, you must apply and meet the criteria	Over 30 options across general, mandatory, and administrative categories
Interest on Direct Subsidized Loans	Does not accrue	Accrues
Interest on unsubsidized and PLUS loans	Accrues	Accrues
Unpaid interest capitalized at the end?	Yes, the Higher Education Act requires it	No, the Department of Education does not capitalize it
Typical length	Varies by type. Economic hardship is up to 1 year at a time, 3 years cumulative	General forbearance up to 12 months at a time, 3 years cumulative

Source: Congressional Research Service, IF12896, February 2025.

Does interest accrue during deferment or forbearance?

Interest accrues during forbearance on all Direct Loan types with no exceptions. During deferment, interest does not accrue on Direct Subsidized Loans or on the portion of a Direct Consolidation Loan that repaid a subsidized loan, but it does accrue on Direct Unsubsidized Loans, Grad PLUS, and Parent PLUS.

There is a second difference that surprises people, and it runs the other way. At the end of a deferment, the Higher Education Act requires the Department of Education to capitalize your unpaid accrued interest, meaning it gets added to your principal and you start paying interest on your interest. At the end of a forbearance, the Department does not capitalize it. So if all your loans are unsubsidized, a deferment is not automatically the better deal, because the interest that piled up during it gets folded into your balance.

Do deferment and forbearance months count toward student loan forgiveness?

Some deferment months count toward RAP forgiveness, and general forbearance months do not. The statute that created RAP lists what counts as a qualifying monthly payment toward the 360 needed for cancellation, and that list explicitly includes a month when you made no payment because you were in an unemployment deferment or an economic hardship deferment (P.L. 119-21, Sec. 82001(d), adding HEA Sec. 455(q)(1)(F)(vi)). General forbearance is not on that list.

Two more consequences of pausing, both written into the same section of the law:

• The RAP interest waiver only applies in months you make an on-time payment. Pause, and unpaid interest is charged to you normally.
• The $50 minimum principal reduction only applies to a borrower who is not in a period of deferment or forbearance. Pause, and your balance stops getting that push down.

For Public Service Loan Forgiveness the rule is tighter still. If you have any loan disbursed on or after July 1, 2026 and you are enrolled in RAP, only payments made on or before the due date in the full amount due qualify for PSLF (Federal Student Aid). Deferment and forbearance months do not count toward your 120 in that situation, even though an unemployment deferment would still count toward the RAP 360.

How much would I pay instead of pausing?

For a borrower with $45,000 in Direct Unsubsidized Loans at 6.5 percent, filing single with no dependents, the RAP payment at hardship-level incomes runs from $10 to $150 a month. Those are the amounts you would be choosing against when you request a forbearance.

Adjusted gross income	RAP monthly payment	Standard 10-year payment for comparison
$12,000	$10	$511
$18,000	$15	$511
$26,000	$43	$511
$34,000	$85	$511
$45,000	$150	$511

Assumptions: $45,000 balance, 6.5 percent interest, Direct Unsubsidized, single filer, no dependents, no prior income-driven repayment months, not pursuing PSLF. Computed on July 27, 2026 with the Finology Software parity-verified engine.

The $10 floor is not a rounding artifact. It is in the statute: if the calculated payment comes out below $10, your payment is $10 (P.L. 119-21, HEA Sec. 455(q)(4)(B)(ii)). At a $12,000 income, a year of forbearance saves you $120 in payments and costs you 12 months of forgiveness credit, 12 months of waived interest, and up to $600 of principal reduction.

RAP is not automatically your cheapest option. IBR is often lower at low incomes and forgives at 240 months instead of 360. Our RAP vs IBR comparison walks through when each one wins, and the full RAP payment schedule by income shows where the bracket cliffs sit.

What changes for deferment and forbearance on July 1, 2027?

For loans made on or after July 1, 2027, unemployment deferment and economic hardship deferment go away entirely, and forbearance is capped at 9 months in any 24-month period. Both changes come from Section 82002 of the One Big Beautiful Bill Act.

The law is specific. On deferment, a borrower who receives a loan made on or after July 1, 2027 is not eligible to defer that loan under the unemployment or economic hardship provisions. On forbearance, such a borrower may only be eligible for a forbearance that does not exceed 9 months during any 24-month period (P.L. 119-21, Sec. 82002).

Loans you already have, and loans made before July 1, 2027, keep the current rules. Other deferment types, including in-school, cancer treatment, graduate fellowship, and military service, are not affected.

When does a forbearance still make sense?

Forbearance is the right call when the gap is short and administrative rather than financial. The clearest cases are an administrative forbearance while your servicer processes an income-driven repayment application or a consolidation, a mandatory forbearance you qualify for by statute such as AmeriCorps service, or a genuine one or two month cash gap you can name an end date for.

What it is not good for is a long stretch of low income. That is what an income-driven plan is built to handle, and the Congressional Research Service makes the same point, noting that income-driven plans may provide longer-term strategies for managing student loan debt and may decrease the necessity of using short-term options like deferment and forbearance.

Frequently asked questions

Is deferment or forbearance better for student loans?
Deferment is better if you have Direct Subsidized Loans, because the government pays the interest during the deferment. If all your loans are unsubsidized, the two are closer than they look, because unpaid interest capitalizes at the end of a deferment but not at the end of a forbearance. For a long income problem rather than a short one, an income-driven payment usually beats both.

Does interest capitalize after deferment or forbearance?
Interest capitalizes at the end of a deferment, because the Higher Education Act requires the Department of Education to add unpaid accrued interest to principal. It does not capitalize at the end of a forbearance.

Do forbearance months count toward RAP forgiveness?
No. General forbearance months are not qualifying monthly payments under the Repayment Assistance Plan. Unemployment deferment and economic hardship deferment months do count toward the 360 payments needed for RAP cancellation.

What is the minimum student loan payment under RAP?
$10 a month. If your calculated RAP payment falls below $10, the statute sets your payment at $10.

When do unemployment and economic hardship deferment end?
They end for loans made on or after July 1, 2027. Loans made before that date keep both options under the current rules.

Getting the actual number for your loans

The right comparison is never deferment versus forbearance in the abstract. It is what a pause costs you against what your income-driven payment would be, on your balances, with your loan types and your forgiveness clock. Financial advisors who use Finology Software can model that side by side and show you the lifetime cost of each path before you file the request. You can also start with our RAP payment calculator to see the payment you would be choosing against.