During any period of deferment or forbearance, interest can accrue and be capitalized to the principal loan balance at the end of the deferment or forbearance period if it is not paid by the borrower as it accrues.
This statement explains that during a deferment or forbearance period, interest will continue to accrue on the loan but won't be paid until the end of the deferment/forbearance period. If the borrower doesn't pay this accrued interest, it is added to the principal amount.