If you pause federal student loan payments, who pays the interest?
Summary
On a Direct Subsidized Loan, the Education Department pays the interest while you are in school at least half-time, for the six-month grace period after you leave, and during deferment. On Direct Unsubsidized and PLUS loans the interest is yours in every one of those periods, and during forbearance it is yours on every loan type. Paused months generally do not count toward Public Service Loan Forgiveness or income-driven discharge either.
The six months after school
After you graduate, leave school, or drop below half-time, Direct Subsidized and Unsubsidized Loans give you six months before the first payment is due. On a subsidized loan, the department covers the interest for those six months. On an unsubsidized loan it accrues, and you can pay it as it builds or leave it for later.
Parent PLUS loans have no grace period. Repayment starts once the loan is fully disbursed, unless the parent asks for a deferment, which can last while the student is enrolled at least half-time and for six months after. Interest accrues during that deferment.
Deferment
Deferment is available for specific situations, each with its own form and documentation:
- enrollment in school at least half-time (often applied automatically)
- unemployment or economic hardship
- cancer treatment
- qualifying military service, or the period after active duty
- a graduate fellowship or rehabilitation training program
- a parent PLUS borrower whose student is enrolled
Whether interest runs depends on the loan:
| You don't pay the interest | You generally do |
|---|---|
| Direct Subsidized Loans | Direct Unsubsidized Loans |
| Subsidized Federal Stafford Loans | Unsubsidized Federal Stafford Loans |
| Federal Perkins Loans | Direct PLUS and FFEL PLUS Loans |
| Subsidized portion of a consolidation loan | Unsubsidized portion of a consolidation loan |
Interest you leave unpaid is added to the principal when the deferment ends on Direct and FFEL loans. Perkins Loans never capitalize.
Forbearance
Forbearance lets you stop paying or pay less for a while, and interest accrues on every loan type. On a $15,000 Direct Unsubsidized Loan at 8.07%, six months of forbearance adds about $605 of interest:
For most loans that interest does not capitalize when forbearance ends. It gets paid off through your regular payments. The exception is FFEL loans not managed by the Education Department.
General forbearance, the kind a servicer can grant for financial trouble, medical bills, or a job change, has limits. Loans received before July 1, 2027 can get up to 12 months at a time, and loans received on or after that date up to nine months in any 24-month period. General forbearance also has a cumulative limit of three years. Mandatory forbearance, for situations such as a medical residency or National Guard duty, runs up to 12 months at a time and can be renewed while you still qualify.
Keep paying until the servicer tells you a deferment or forbearance has been approved. If you stop and the request is denied, the loan is delinquent.
Loans made from July 1, 2027
Two changes from the One Big Beautiful Bill Act apply to loans made on or after July 1, 2027. Economic hardship and unemployment deferments are not available for them, and general forbearance is capped at nine months in 24.
Paused months and forgiveness
Forbearance months do not count toward PSLF or income-driven discharge, and in most cases deferment months do not either. On the Repayment Assistance Plan there is one more cost. RAP waives only interest that builds between due dates while you are repaying under the plan, so interest from a deferment or forbearance is not waived. The department says a RAP borrower who pays in full and on time, with no breaks, will never owe more than the balance they started with, and a pause is exactly such a break.
Sources
- Federal Student Aid, studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized
- Federal Student Aid, studentaid.gov/manage-loans/lower-payments/get-temporary-relief
- Federal Student Aid, studentaid.gov/manage-loans/lower-payments/get-temporary-relief/deferment
- Federal Student Aid, studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance
- Federal Student Aid, studentaid.gov/understand-aid/types/loans/plus/parent
- Federal Student Aid, studentaid.gov/announcements-events/big-updates/definitions
Written by Kaz (pen name). Figures are copied from the sources' published pages on the dates shown. We have not used these products. Corrections: contact form.