A deferment is a period in which the borrower does not have to make interest or principal payments on a loan. There are no penalties for these missed payments. Deferments are generally agreed to upfront and written into the loan contract. Interest still accrues on the loan during the deferment. Student loans often have a deferment period while the student is in school and for a few months after graduation. Once the deferment period ends, the borrower will begin making regular payments. The borrower does not have to make any lump sum payments as a result of the deferment. Bond issuers can also receive deferments, which allow them to call the bond before maturity.
