Student loan expert: Avoid this 'tempting' move if you're struggling to make payments

Millions of Americans are struggling to make their monthly student loan payments.

More than 1 in 3 borrowers with federal student loans were at least 30 days late on a payment, as of a June 2025 update from the Department of Education. Additionally, 42% of borrowers say their loans have negatively impacted their ability to cover their basic needs, a recent survey by The Institute for College Access and Success found.

If you're struggling, "it may be tempting to just not make payments on your federal student loans, [but] that may not be a wise choice in the long run," says Glenn Sanger-Hodgson, a student loan advisor at Student Loan Planner.

Avoiding your loans altogether may seem like your only option, especially if you're juggling your monthly payment with necessities like rent or groceries. But if you skip payments for long enough that you default on your loans — typically 270 days after your first missed payment — the consequences could put you in an even worse situation.

"The federal government has extraordinary collection powers, such as the ability to garnish wages without a court order or to seize federal tax refunds, including refundable credits, like the earned income tax credit," Sanger-Hodgson says.

Here's what you can do instead.

If you know you're going to have trouble making your student loan payment, "the first thing you should do is contact your servicer," Sanger-Hodgson says.

Your loan servicer can help you identify income-driven repayment plans that may lower your monthly payment or place you in a deferment or forbearance to pause your payments "while you figure out how to get back to paying your loans," Sanger-Hodgson says. You won't need to make payments if your loans are approved for a forbearance or deferment, but the programs differ in the way interest accrues.

With a deferment, which is available for borrowers undergoing cancer treatments, experiencing financial hardship like unemployment or other scenarios, interest won't accrue on subsidized loans.

Loan servicers may grant a forbearance to borrowers who demonstrate financial difficulty, such as having high medical expenses or too high of a monthly payment, but borrowers are responsible for interest that accrues on all loans.

Both forbearances and deferments have different eligibility requirements and are subject to servicer approval, per Federal Student Aid guidelines. Borrowers may be granted a forbearance for up to 12 months at a time and up to three years cumulatively. Time limits for deferments vary.

Getting approved for one of those relief options "can be a good solution to avoid making payments in the short-term, freeing up cash for higher-priority debts," Sanger-Hodgson says.

Once you've requested a deferment or forbearance, "focus on paying debts associated with necessities, like a mortgage or auto loan, especially if those loans are secured by an asset that could be taken away," Sanger-Hodgson says. Safely pausing student loan payments can "be a useful tool while the borrower works on stabilizing themselves financially," he adds.

Borrowers without other debts may consider lowering their retirement savings elections if they're feeling strapped for cash. But saving for the future and paying off your loans aren't necessarily "at odds" with each other, Sanger-Hodgson says. 

That's because if you're on an income-driven repayment plan, contributing to pre-tax accounts like a 401(k) or individual retirement account can lower your taxable income and thus your student loan payment, creating a "positive feedback loop," he says. 

Plus, some employers now offer student loan payment benefits that help workers more easily accomplish both goals at once. 

Still, "in some cases, it can be a good idea to pause or reduce your retirement savings," Sanger-Hodgson says. "For example, if you have private student loans with a high interest rate, you may be better off tackling those as quickly as possible."

Interest rates on private student loans range from 2.79% to 17.99%, according to Bankrate, and are generally higher than the rates for federal loans. Additionally, private loans don't offer the same protections as federal loans, such as income-driven repayment plans, deferments and forbearances, and forgiveness opportunities.

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