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Fewer people with federal student loans are making payments on their debt.
Around 10.3 million borrowers were enrolled in a payment pause known as a forbearance in the third quarter of 2025, up from around 2.9 million during the same time period in 2024, according to U.S. Department of Education data analyzed by higher education expert Mark Kantrowitz.
(The Education Department’s fiscal year starts on Oct. 1; its third quarter spans April 1 to June 30.)
Another 3.4 million federal student loan borrowers had deferred their payments in the third quarter of this year, up from 3.2 million a year earlier, Kantrowitz found. Deferments, which are available for various reasons such as job loss or a cancer diagnosis, are another way for borrowers to postpone student loan payments.
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Between those in a forbearance or deferment status, more than a quarter of the country’s over 40 million federal student loan borrowers had their repayment progress suspended during the third quarter.
“It shows that many borrowers are struggling to balance loan payments alongside housing, child care and other rising costs,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.
Fallout from the end of SAVE plan
The sharp increase in student loan borrowers enrolled in a forbearance stems, at least in part, from the fallout of a Biden administration-era repayment plan. President Joe Biden’s SAVE, or Saving on a Valuable Education, plan was met with Republican-led legal challenges and eventually repealed this summer in President Donald Trump‘s “big beautiful bill.”
The millions of borrowers who enrolled in the SAVE plan were placed in a forbearance in the summer of 2024 while the lawsuits played out. That payment pause remains available, although the Trump administration is now charging interest to those who take advantage of it.
It’s unclear how many borrowers currently remain in the plan, but the Education Department recently said around 7 million people had signed up for it.
While some borrowers may be opting to keep their payments paused, others who want to get out of the SAVE forbearance are struggling to do so, Kantrowitz said. As of the end of July, the Education Department had a backlog of over 1.3 million applications from borrowers trying to get into an income-driven repayment, or IDR, plan, recent court documents show.
Repayment troubles
Many student loan borrowers with their bills paused can’t afford the repayment plan options available to them, consumer advocates said. The monthly payments on SAVE were much lower than those offered under other plans, and recent legislation further narrows borrowers repayment choices.
“The student borrowers for whom the SAVE plan was the only affordable option will be severely impacted by these changes,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.
For example, a student loan borrower with an annual salary of around $75,000 would pay $166 a month under SAVE, compared with $429 under the Income Based Repayment plan — the program experts have described as the next best option after SAVE right now.
Another sign that student loan borrowers are struggling can be found in the steep increases in deferments for those who’ve lost their job or experienced another financial hardship.
The number of borrowers in an economic hardship deferment doubled from 50,000 in the third quarter of 2024 to 100,000 in the third quarter of 2025, Kantrowitz calculated. Those signed up for the unemployment deferment rose to 180,000 from 140,000 over that period.
A cycle that ‘delays financial milestones’
Time spent in a deferment or forbearance can be incredibly costly.
A typical federal student loan borrower can see their debt grow by $219 a month in interest charges alone while they pause their payments, Kantrowitz calculated. (That assumes they owe the average outstanding federal student loan balance of around $39,000, and have the average interest rate of roughly 6.7%.)
“The risk is that interest can continue to accrue during these pauses, making balances even harder to manage long-term,” said Boneparth, who is also a member of the CNBC Financial Advisor Council.
“For many, it becomes a cycle that delays financial milestones like saving for retirement, buying a home or starting a family.”