Veteran Student Loan Deferment and Forbearance: How to Pause Payments
Can You Pause Your Student Loans as a Veteran?
Yes. If you’re struggling with student loan payments, you have two options to pause them without defaulting: deferment and forbearance. Both allow you to temporarily stop or reduce monthly payments on federal student loans. As a veteran, you may also have additional options depending on your situation, service-connected disability status, or public service employment.
Deferment vs. Forbearance: Key Differences
Deferment is a period during which you don’t have to make monthly payments on most federal student loans. During deferment, the government typically pays the interest on subsidized loans, so your balance doesn’t grow. This is the better option if you qualify.
Forbearance is a temporary pause where you reduce or stop payments, but interest accrues on all loans (including subsidized loans). Your balance grows because unpaid interest gets added to your principal. Forbearance is the fallback option when you don’t qualify for deferment.
Types of Deferment for Veterans
Military Service Deferment
If you’re on active duty in the U.S. Armed Forces, you qualify for military service deferment automatically. Simply notify your loan servicer with proof of active duty status (military ID, discharge paperwork, or orders). During this deferment, interest on subsidized loans is paid by the government—you owe nothing and your loan doesn’t grow.
This deferment continues as long as you’re on active duty, plus six months after separation. After those six months, contact your loan servicer to continue or transition to another deferment type.
Post-Active Duty Deferment (Six Months After Service)
When you separate from active duty, you automatically get six months of deferment. This is a grace period to transition back to civilian life and find stable employment. During these six months, no payments are required and the government covers interest on subsidized loans. Use this time to find a job and stabilize your finances.
Unemployment Deferment
If you’re unemployed or underemployed, you may qualify for unemployment deferment on federal student loans. You must register with your state’s unemployment office or participate in a job search activity to qualify. Deferment lasts up to three years total (one year at a time, renewable twice).
Economic Hardship Deferment
If you’re experiencing financial hardship—income below the poverty line, receiving government assistance, or struggling to pay basic living expenses—you may qualify for hardship deferment. This requires documentation of your financial situation and can last up to three years (one year at a time, renewable twice).
Forbearance Options for Veterans
If you don’t qualify for deferment, forbearance lets you pause payments temporarily. The catch: interest accrues during forbearance, meaning your loan balance grows. You’ll owe more when forbearance ends.
General Forbearance
If you’re having difficulty making payments due to hardship, your loan servicer may grant forbearance for up to 12 months. The eligibility bar is low—you just need to show you’re having trouble paying. You can renew this multiple times, but there’s no maximum total duration (unlike deferment’s three-year limit).
Mandatory Forbearance
Your loan servicer must grant forbearance if you meet certain criteria, including:
- You’re serving in AmeriCorps or Peace Corps
- You’re a medical/dental resident or fellow
- You work in a public defender or legal services office
- Your loan debt is > 20% of your gross income
- You’ve recently separated from active duty (though the six-month deferment usually covers this)
Special Veteran Benefit: Total and Permanent Disability (TPD) Discharge
If you have a service-connected disability rated at 100% by the VA, or if the VA determines you have a permanent total disability, you may qualify for Total and Permanent Disability (TPD) discharge. This cancels your federal student loans entirely—you don’t have to repay them.
This is huge. TPD discharge means your student loans vanish; you owe nothing, and the government doesn’t come after you for unpaid balance. File this application through studentaid.gov. Proof of your VA disability rating or Social Security Administration disability determination is required.
How to Request Deferment or Forbearance
- Contact your loan servicer directly (find them on studentaid.gov or your loan documents)
- Request the specific deferment or forbearance type you qualify for (military service, unemployment, hardship, etc.)
- Provide required documentation (military discharge papers, unemployment records, income verification, etc.)
- Sign the request form (most servicers use a Federal Student Loan Deferment/Forbearance Request form)
- Submit and wait (processing typically takes 5-10 business days)
What Happens to Interest During Deferment and Forbearance?
Deferment: Government pays interest on subsidized loans; unsubsidized loans accrue unpaid interest (which capitalizes later)
Forbearance: All loans accrue unpaid interest; this gets added to your principal balance when forbearance ends
Example: $20,000 loan on 12-month forbearance at 5% interest accrues $1,000 of interest. When forbearance ends, you owe $21,000 instead of $20,000.
Can You Switch Between Deferment and Forbearance?
Yes. If you’re in deferment and your circumstances change (e.g., you find a job), you can exit deferment anytime. If you’re in forbearance, you can request to switch to deferment if you become eligible. Work with your loan servicer to coordinate the transition.
Deferment and Forbearance Don’t Count Toward PSLF
If you’re pursuing Public Service Loan Forgiveness (PSLF), understand that months spent in deferment or forbearance do not count toward the 120 qualifying payments required for forgiveness. Only months when you’re actively making payments (on an income-driven repayment plan) count. However, the temporary PSLF waiver (which expired in 2023) did allow past forbearance periods to count; check your account to confirm whether this applies to you.
Veteran-Specific Resources
The VA also offers career counseling and transition support to help you move back into employment. If you’re transitioning from active duty, use these services to shorten your unemployment period and avoid needing deferment or forbearance in the first place. The GI Bill and VA job training benefits can also help you enter a higher-paying field faster.
Key Takeaway
If you’re struggling with student loan payments, deferment (if you qualify) and forbearance are temporary lifelines. Military service deferment for active-duty or post-active-duty veterans is automatic—use it. For unemployment or hardship, apply through your loan servicer. And remember: if you’re 100% disabled by the VA, check if you qualify for TPD discharge, which erases your loans entirely. Don’t ignore your loans or default; reach out to your servicer immediately if payments become unmanageable.