Deferment

The borrower submits a deferment request and supporting documentation to the loan servicer. If approved, payments stop for the approved period. The servicer notifies the borrower of the end date. When the deferment expires, repayment resumes under the existing plan unless the borrower requests a different arrangement. In-school deferment is normally applied automatically when the institution reports at least half-time enrollment to NSLDS.

Example: a borrower who returns to an online program at least half-time receives an in-school deferment. Payments stop. Interest does not accrue on any remaining subsidized balance. When the borrower drops below half-time, the deferment ends and a new grace period may begin if one has not already been used.

Forbearance also postpones or reduces payments but is granted at the servicer’s discretion or under different rules, and interest accrues on all loan types. A grace period is the automatic six-month bridge after leaving school. Deferment requires meeting a defined eligibility category and, except for in-school status, an approved application.

Assuming interest never accrues during deferment. Treating a verbal request to the servicer as sufficient without documentation. Expecting deferment to erase accrued interest or reduce the principal balance.