How Student Loan Deferment and Forbearance Work

In this episode of Debt Payoff with Fexingo, Lucas and Luna dive into the mechanics of student loan deferment and forbearance. Using the example of a borrower with $35,000 in federal loans at 5.05% interest, they explain how each option works, how interest capitalizes, and why a year of forbearance could add $1,800 to your total balance. They compare the two options across subsidized versus unsubsidized loans, highlight recent changes to IDR plans under the SAVE program as of May 2026, and discuss alternatives like income-driven repayment. The episode includes a concrete case study: a borrower who used deferment during grad school but later regretted it because $3,200 in capitalized interest snowballed. Listeners learn one actionable question to ask their servicer before choosing either option. #StudentLoans #Deferment #Forbearance #LoanRepayment #InterestCapitalization #FederalStudentAid #SubsidizedLoans #UnsubsidizedLoans #IncomeDrivenRepayment #SAVEPlan #HigherEducation #PersonalFinance #DebtManagement #FinancialLiteracy #LoanServicer #BorrowerProtection #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo