A payment pause stops your monthly loan payments temporarily, but your loans remain in your name and interest continues to accrue on most federal loans
A payment pause is a period during which you do not have to make monthly payments on your federal student loans. The pause does not erase the debt, forgive any balance, or change who owes what — it straightforward suspends the requirement to pay for a defined time. During a pause, your loans stay active, your balance remains owed, and on most loan types, interest continues to grow and attach to your principal.
Payment pauses have been used at different times for different reasons. The most recent large-scale pause began in March 2020 during the pandemic and ended in October 2023. Pauses can also explore to individual borrowers in specific circumstances — for example, if you are in school at least half-time, or if you are experiencing financial hardship. Understanding what a pause does and does not do is essential before relying on one to manage your budget.
Key Takeaways
- A payment pause stops your monthly payment requirement but does not reduce your loan balance or stop interest from accruing on most federal loan types.
- During a pause, your loans remain in default status if they were already in default, and you do not build payment history toward forgiveness programs.
- Interest that accrues during a pause is usually capitalized — added to your principal — when the pause ends, increasing the total amount you owe.
- Pauses for individual borrowers (such as deferment or forbearance) are different from system-wide pauses and have different rules about interest and may be able to access.
- When a pause ends, your payment obligation resumes at the amount set before the pause unless you change your repayment plan.
How interest works during a pause
On most federal student loans, interest accrues — builds up — even when you are not required to pay. The exception is subsidized loans, on which the government covers interest while you are in school or during certain pauses. On unsubsidized loans, PLUS loans, and private loans, interest continues to grow daily during a pause.
At the end of the pause, that accrued interest is usually capitalized, meaning it is added to your principal balance. Once capitalized, you pay interest on the interest. For example, if you owe $30,000 and $2,000 in interest accrues during a pause, your new balance becomes $32,000, and future interest calculations are based on that higher number. This is why a pause can actually increase the total cost of your loan over time, even though you made no payments.
Some pauses include interest waiver provisions — periods during which interest does not accrue at all. The pandemic pause from 2020 to 2023 included an interest waiver, which was unusual. Most pauses do not. When a pause ends, ask your loan servicer whether any accrued interest will be capitalized or whether you can pay it separately to avoid this compounding effect.
Pauses for individual borrowers versus system-wide pauses
A system-wide pause affects all federal student loan borrowers at once, usually by government action. The pandemic pause is the most recent example. A pause for individual borrowers applies to you alone and is based on your specific circumstances. These individual pauses include deferment, forbearance, and in-school status.
Deferment and forbearance both stop your payment requirement, but they differ in how they handle interest and how they affect your loan history. In deferment, interest on subsidized loans does not accrue, but interest on unsubsidized loans does. In forbearance, interest accrues on all loan types. Both can be granted for reasons like economic hardship, unemployment, or medical conditions. Your loan servicer can tell you which option you may be may be able to access for based on your situation.
Individual pauses do not count as on-time payments toward income-driven repayment forgiveness programs. If you are working toward Public Service Loan Forgiveness or income-driven forgiveness, a pause freezes your progress toward the payment count required for forgiveness. This is a significant difference from making regular payments, even small ones.
What happens to your payment history during a pause
Pauses do not advance your payment count toward forgiveness programs. If you are on an income-driven repayment plan and working toward forgiveness after 20 or 25 years of payments, months during a pause do not count. This means a long pause can delay when you become may be able to access for forgiveness.
If your loans are in default — meaning you have not paid in more than 270 days — a pause does not remove that default status. Your loans remain in default during the pause, and collection activity may resume when the pause ends. If you are in default and a pause is announced, contact your servicer when ready to discuss whether you can enter a repayment plan or deferment to stop collection efforts.
A pause also does not prevent your servicer from reporting your account status to credit bureaus. If you were current on payments before the pause, your account will likely remain reported as current. If you were behind, that status may continue to be reported during the pause.
When a pause ends and payments resume
When a system-wide pause ends, your loan servicer will notify you of the restart date, usually 30 to 60 days in advance. Your payment obligation resumes at the amount you were paying before the pause, unless you have changed your repayment plan in the meantime. If you cannot afford that payment, you can request a plan change before the pause ends to lower your monthly amount.
Any accrued interest that was not waived will be capitalized to your balance shortly before or after the pause ends. Your servicer should send you a statement showing your new balance. Review this carefully to confirm the capitalization amount and to understand your new total debt.
If you are concerned about resuming payments, contact your servicer before the pause ends. You can discuss income-driven repayment plans, which base your payment on your current income rather than your loan balance, or explore whether you may have access to for deferment or forbearance if your circumstances have not improved.
Private loans and pauses
Private student loans are not covered by federal pauses. If you have private loans, your payment obligation continues regardless of any system-wide pause on federal loans. Some private lenders may offer their own pause or forbearance options during times of widespread hardship, but this is at the lender's discretion and is not may provide.
If you have both federal and private loans, you will need to manage them separately. During a federal pause, your federal loans stop requiring payment, but your private loans do not. This can create a gap in your budget if you were counting on a pause to free up money for all your student debt.
How to prepare for a pause to end
Before a pause ends, review your current income and expenses to determine whether you can afford your previous payment amount. If you cannot, contact your servicer to change your repayment plan. Income-driven plans can reduce your payment to as low as $0 per month if your income is below the poverty line, though you will still owe the loan and interest will continue to accrue.
Check your loan balance statement to see how much interest has accrued and will be capitalized. This helps you understand your new total debt and plan accordingly. If the capitalized interest is substantial, you may want to prioritize paying it down quickly to reduce future interest charges.
If you have been in default, use the pause period to contact your servicer about rehabilitation or consolidation options. These can help you get out of default status before the pause ends and collection activity resumes.
Frequently Asked Questions
Does a payment pause stop interest from building on all my loans?
No. Interest continues to accrue on unsubsidized loans, PLUS loans, and private loans during a pause. Subsidized federal loans do not accrue interest during certain pauses, but this depends on the type of pause and the specific rules in effect. Check with your servicer about your loan type.
If I don't make payments during a pause, does that hurt my credit score?
Not during an official pause. If your account was current before the pause began, it will typically remain reported as current. However, if you were already behind on payments, that status may continue to be reported. Pauses do not erase past late payments from your credit history.
Can I make voluntary payments during a pause?
Yes. You can pay toward your loans at any time, even during a pause. Voluntary payments reduce your principal balance and can help offset accrued interest. Ask your servicer how to make a payment that goes toward principal rather than being held as a credit for future payments.
What happens to my payment count toward forgiveness if there's a pause?
Months during a pause do not count toward the payment requirement for income-driven forgiveness programs. If you are working toward forgiveness after 20 or 25 years of payments, a pause delays your progress. Only actual payments count, not paused months.
Will my payment amount change when the pause ends?
Your payment will return to the amount you were paying before the pause, unless you change your repayment plan. If you cannot afford that amount, contact your servicer before the pause ends to switch to an income-driven plan or discuss other options.