Repayment after the 2025 law · guide
Deferment and forbearance after the 2025 law
For federal loans made on or after July 1, 2027, the unemployment deferment and the economic hardship deferment no longer exist, and discretionary forbearance is capped at 9 months in any 24-month period. Loans made before that date keep the old rules. Both changes come from section 82002 of Public Law 119-21 and the regulations of May 1, 2026, which put them into effect on July 1, 2027. The logic is that the Repayment Assistance Plan, with a payment as low as $10 and a waiver of the interest an on-time payment does not cover, makes a full pause less necessary. A pause is also expensive: $35,000 of unsubsidized loans at 6.52% accrues about $1,711 of interest during nine months of forbearance, while a borrower with an income of $18,000 would pay $15 a month on RAP and have the rest of the interest waived. Deferment and forbearance months still matter for forgiveness in specific cases, which this page lists, together with what to do when income stops.
What a pause costs in interest
Interest accrued during the pause
$1,711
| Rate used | 6.52% |
| RAP payment instead, per month | $15 |
| RAP paid over the same months | $135 |
On RAP, on-time payments waive the interest they do not cover.
Pausing payments is getting harder for new loans. Here is what changes, for which loans, and what replaces the pause.
Checked by Radif Partners · Editorial policy · How we calculate
What changes, for which loans
| Rule | Loans made before July 1, 2027 | Loans made on or after July 1, 2027 |
|---|---|---|
| Unemployment deferment | Available | Not available |
| Economic hardship deferment | Available | Not available |
| Discretionary forbearance | Under the existing rules | At most 9 months in any 24-month period |
| In-school, military and other deferments | Available | Unchanged by the 2025 law |
The test is the date the loan was made, not the date you ask for the pause. A student borrowing every year will hold some loans under the old rules and some under the new ones, and a request for an unemployment deferment would then apply only to the older loans.
The cost of pausing
A pause stops payments, not interest. On unsubsidized loans, interest keeps running every day of a deferment or forbearance. Nine months on $35,000 at 6.52% adds about $1,711; on $80,000 of graduate loans at 8.07% the same nine months add about $4,842. When that interest is capitalized, it becomes principal and earns interest itself. Borrowers who expect income to return quickly sometimes accept that cost for the simplicity of a pause. Borrowers facing a longer gap usually do better on an income-driven plan, where the payment follows income down.
RAP as the replacement
The new design leans on RAP. With an AGI of $10,000 or less, the RAP base payment is $120 a year, $10 a month, and the payment never falls below $10. Each on-time payment wipes the unpaid interest of the month and earns a principal reduction equal to the payment when nothing else reached principal. A borrower who loses a job can ask for the payment to be recalculated on current income, with documentation, rather than waiting for the next tax return. For loans made after July 1, 2027 that is the main tool left, and for older loans it is often better than the deferment they could still request. The RAP calculator shows the payment at any income.
Three borrowers facing a gap
A graduate who finished in 2025 and loses a job in 2027 holds only loans made before July 1, 2027. She can still request an unemployment deferment; her subsidized loans would not be charged interest during it, but her unsubsidized ones would. If her income for the year falls to near zero, RAP would ask $10 a month and count each month toward forgiveness, so the deferment is worth it mainly for a very short gap.
A student who borrows for a master's degree starting in fall 2027 holds a loan made after the cutoff. After graduation, if he loses his job, there is no unemployment deferment on that loan and at most nine months of discretionary forbearance in any two years. RAP is his realistic tool, and it covers his older undergraduate loans too, because borrowers with a loan made after July 1, 2026 repay all their Direct Loans under RAP or the Tiered Standard plan.
A parent who took a parent PLUS loan in 2027 for a child's sophomore year has neither RAP nor the two deferments on it. The fixed Tiered Standard payment continues, with forbearance capped at nine months per 24. For that parent, planning cash reserves before borrowing matters more than for any other borrower, and borrowing less than the new $20,000 annual cap is the simplest way to keep the fixed payment within reach if income drops later.
Forgiveness credit during a pause
Months without a payment can still count, depending on the program. For RAP, the regulation counts months in an unemployment deferment or an economic hardship deferment as qualifying payments (34 CFR 685.209(k)(8)). For PSLF, months in cancer treatment deferment, economic hardship deferment, military service and post-active-duty deferments, AmeriCorps and National Guard forbearances, Department of Defense repayment forbearance and certain administrative forbearances count, except during periods on RAP (34 CFR 685.219(c)(2)). For IBR, a similar list counts toward forgiveness, and a borrower can sometimes buy back other deferment months by paying what the income-driven plan would have required. Ordinary discretionary forbearance generally does not count.
Former SAVE borrowers and forbearance
Borrowers on SAVE spent months in a litigation forbearance, first at a 0% rate and then, from August 1, 2025, with interest accruing. The settlement keeps the deferment and forbearance provisions of the SAVE rule that count for income-driven forgiveness. The transition away from SAVE is also a moment to avoid sliding into another forbearance by default: choosing RAP or IBR within the 90-day notice keeps payments low and forgiveness credit running. The SAVE page covers the transition.
When a pause still makes sense
None of this abolishes the pause. It narrows it, for new loans, to the situations the law still protects, and it pushes everyone else toward a small payment that keeps the account moving.
Deferment remains the right tool in specific situations: returning to school at least half time, active military service, treatment for cancer, or a short gap on older loans where subsidized interest is covered. Forbearance can bridge a few weeks while an income-driven application is processed; the regulations provide an administrative forbearance for that purpose. Outside those cases, compare the interest a pause would add with the RAP payment you would make instead. The mini-calculator above does that comparison for any balance and length.
Planning for the new limits
Students who will borrow in 2027 and later should plan with the new rules in mind. A loan made in the 2027-28 award year will have no unemployment deferment and only nine months of forbearance in any two years. Building an emergency fund, setting up auto pay, and knowing how to apply for RAP quickly are the practical defenses. The auto pay page and the plan comparator help prepare that first year of repayment.