deferment

Deferment is the act of postponing or delaying a payment, decision, or obligation to a later date. It is used in many contexts, and is typically established through a formal arrangement in policy, contract, or law.

In finance, deferment refers to postponing a payment or the recognition of revenue or expense. For loans, a deferment allows borrowers to suspend payments for a defined period. Eligibility varies by product and lender and may depend on circumstances such as employment, education, or hardship. The treatment of interest during deferment differs by program: some loans do not accrue interest during deferment (for example, subsidized portions of certain student loans), while others continue to accrue interest.

In education and military contexts, deferment can mean temporary exemption from a duty, assignment, or draft, pending the resolution of a condition such as enrollment, health, or service requirements.

In accounting and taxation, deferment refers to recognizing income, expense, or tax liability at a later date than the time of its occurrence, creating a timing difference between cash flow and financial reporting.

Deferment arrangements are typically formalized by an agreement that specifies the duration, conditions, and consequences, including any penalties, interest, or impact on credit. Deferment is not forgiveness; the underlying obligation still exists and will be due later.