Student Loan Pause: Key Options and Costs

Ever stared at a student loan bill and felt your stomach drop? You’re not alone. With over 40 million Americans juggling federal student loans, the weight of those monthly payments can feel like a boulder on your shoulders. But what if you could hit pause? The U.S. Department of Education offers ways to temporarily halt payments, known as deferments and forbearances, and they’re lifesavers for many. Still, I’ve learned through countless conversations with borrowers that these options aren’t as simple as they sound. Let’s dive into what pausing your student loans really means, the hidden costs, and how to make smart choices to keep your financial future bright.

Why Pausing Student Loans Is Gaining Traction

The numbers are staggering: over a quarter of federal student loan borrowers paused their payments in the third quarter of 2025, according to recent data from higher education analysts. That’s more than double the number from the same period in 2024. Why the surge? Life happens—job losses, medical emergencies, or just plain old financial strain. For many, pausing payments feels like the only way to avoid drowning in debt. But here’s the kicker: not all pauses are created equal, and choosing the wrong one could leave you worse off.

The Lifeline of Payment Pauses

Let’s be real—missing a student loan payment can spiral into a nightmare. Defaulting tanks your credit score, triggers wage garnishments, and tacks on hefty collection fees. That’s where deferments and forbearances come in. These tools let you temporarily skip payments without the immediate fallout of delinquency. As one financial advisor put it, they’re like a safety net for borrowers who are stretched thin.

Pausing payments can be a critical tool to prevent default, but it’s not a free pass. Borrowers need to understand the fine print.

– Financial counselor

So, how do these options work? A deferment lets you postpone payments, sometimes without interest piling up, depending on your loan type. A forbearance, on the other hand, always comes with interest accrual, which can make it a costly choice. Both are temporary, but they’re not one-size-fits-all. Let’s break them down.

Deferments: A Break Without the Interest Burden

If you’re eligible for a deferment, it can feel like a financial breather. For certain federal loans, like subsidized Direct Loans, the government covers the interest during the pause, meaning your balance won’t grow. This is huge, especially if you’re in a tight spot—like undergoing cancer treatment or enrolled in a rehabilitation program. I’ve seen friends breathe easier knowing their loans aren’t ballooning while they get back on their feet.

• Cancer Treatment Deferment: No interest accrues, regardless of loan type.
• Unemployment Deferment: For those actively seeking work but coming up short.
• Economic Hardship Deferment: Available if you’re on public assistance or earning below a certain income threshold.
• Rehabilitation Training Deferment: For programs addressing vocational or substance abuse recovery.

Data shows the Economic Hardship Deferment is particularly popular, with usage doubling from 50,000 to 100,000 borrowers between 2024 and 2025. But there’s a catch: most deferments have a three-year lifetime limit. Use them wisely, because once that clock runs out, you’re back to square one.

Forbearances: A Costly Pause

Forbearances are a different beast. They’re easier to get—you don’t need to meet specific criteria like with deferments—but they come with a price. Interest accrues on all loan types, and it can add up fast. Picture this: the average borrower with a $39,000 loan at a 6.7% interest rate racks up about $219 in interest per month during a forbearance. That’s money you’ll owe later, making your debt grow like a weed.

Is it worth it? Sometimes, yes. If the alternative is defaulting, a forbearance can keep you afloat. But as of July 2027, new rules will limit general forbearances to nine months every two years, so you’ll need to plan carefully.

The Hidden Costs of Pausing Payments

Here’s where things get tricky. Pausing payments might feel like a relief, but it’s not a long-term fix. Interest during a forbearance doesn’t just sit there—it compounds, meaning you’re paying interest on interest. Over time, this can turn a manageable loan into a monster. I’ve talked to borrowers who paused payments for years, only to realize their balance had grown by thousands. It’s like hitting snooze on your alarm—you might get a few extra minutes, but the day’s still coming.

Spending too long in forbearance or deferment just delays the inevitable. It’s a Band-Aid, not a cure.

– Debt relief expert

What’s more, pausing payments often stalls progress toward loan forgiveness. If you’re on an income-driven repayment (IDR) plan, those months in forbearance or deferment usually don’t count toward the 20- or 25-year forgiveness timeline. That’s a big deal if you’re banking on having your balance wiped clean someday.

Smarter Alternatives to Pausing

So, what’s better than hitting pause? For many, income-driven repayment plans are the golden ticket. These plans cap your monthly payment at a percentage of your income—sometimes as low as $10 or even $0. Plus, you’re still making progress toward forgiveness. I’ve always thought IDR plans are like a financial safety valve—they let you breathe without letting your debt spiral out of control.

1. Explore IDR Plans: Contact your loan servicer to see if you qualify for plans like PAYE or SAVE.
2. Check Deferment Eligibility First: If you qualify for a no-interest deferment, it’s often better than a forbearance.
3. Budget Ruthlessly: Cut non-essential expenses to free up cash for payments, even if they’re small.

Another tip? Talk to your loan servicer. They’re not the enemy (most of the time), and they can walk you through options you might not know about. Sometimes, just having that conversation can spark a solution you hadn’t considered.

Real Stories, Real Impact

Let’s get personal for a second. I recently spoke with a friend who paused her loans during a rough patch after losing her job. She opted for a forbearance, thinking it was her only option. Two years later, her balance had grown by $5,000 due to interest. If she’d known about the Unemployment Deferment, she could’ve avoided that hit. Stories like hers are why understanding these options is so crucial.

On the flip side, another acquaintance switched to an IDR plan when her income tanked. Her payments dropped to $15 a month, and she’s still on track for forgiveness in a decade. The difference? She did her homework and asked the right questions.

Making the Right Choice for You

Navigating student loans can feel like walking through a maze blindfolded. Should you pause payments? Switch to an IDR plan? Or just scrape by and keep paying? The answer depends on your situation, but here’s a quick guide to help you decide:

My advice? Don’t just hit pause and hope for the best. Talk to your servicer, crunch the numbers, and think about your long-term goals. Are you aiming for forgiveness? Trying to pay off your loans ASAP? Your strategy should match your priorities.

The Bigger Picture: Managing Debt Wisely

Student loans are a marathon, not a sprint. Pausing payments might give you a breather, but it’s not a finish line. The real goal is to find a sustainable way to manage your debt without letting it define your life. Whether it’s through an IDR plan, a deferment, or even side hustles to boost your income, every step forward counts.

Perhaps the most interesting aspect is how these choices reflect our broader financial habits. Just like skipping a workout doesn’t get you closer to your fitness goals, pausing loan payments without a plan won’t get you closer to financial freedom. It’s about balance—knowing when to pause, when to push forward, and when to ask for help.

The key to managing student loans is staying proactive. Every choice you make today shapes your financial future.

– Financial planner

So, what’s your next step? If you’re feeling overwhelmed, start small. Check your loan status, explore your options, and don’t be afraid to ask questions. Your future self will thank you.