Forbearance by the Millions

As of July, reports show that more than 13 million borrowers are in forbearance or deferment. This follows a troubling trend we highlighted last month—rising delinquency. Right now, about 5 million borrowers are in default, and more than 35% of borrowers are delinquent on their student loans. All together, that’s over 30 million people not making payments on their loans.

This isn’t just a loan problem—it’s a snapshot of a bigger financial struggle. Many borrowers are juggling student loan payments alongside basic needs like housing, childcare, groceries, and rising credit card debt.

Breaking down the numbers 

Deferment and forbearance both let you pause your federal student loan payments for a limited time. The key difference is interest: in forbearance, interest keeps adding up on all loans, while in deferment, certain types of loans don’t accrue interest.

Forbearance (10+ million borrowers):

• Over 7 million borrowers are in forbearance due to enrollment in the SAVE plan, which has been impacted by recent policy shifts.

• More than 1 million borrowers are in administrative forbearance while waiting for their repayment plan changes or IDR applications to process—delays driven by system backlogs.

• The remainder are using forbearance to temporarily pause payments, often because they don’t qualify for deferment but still face financial hardship.

Deferment (~3 million borrowers):

• This number hasn’t changed much in the past year, but there has been a sharp increase in economic hardship and unemployment deferments, signaling more borrowers are leaning on these safety nets.

Why it Matters 

After more than five years of interest-free pauses, interest is now accruing again. For many, that means an extra $200–$300 per month in added interest while loans remain on hold. Forbearance may feel like relief in the short term, but it’s a band-aid solution that can quickly balloon balances and create larger monthly payments later.

The longer loans sit in forbearance, the more they delay financial milestones like saving for retirement, building an emergency fund, or qualifying for a mortgage. In effect, forbearance buys time today at the cost of tomorrow.

The Bigger Picture 

It’s unclear how much of this trend stems from true economic hardship versus confusion over the constantly shifting rules and policies governing repayment programs. What is clear is that borrowers need transparent information and trusted guidance.

At SDS, our mission is to provide that clarity—helping borrowers understand their real options, avoid unnecessary costs, and build a roadmap toward debt freedom. Even if making payments isn’t possible today, creating a plan can turn uncertainty into progress.

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