Markus Andrews

Americans are feeling more optimistic about retirement, thanks to two consecutive years of returns exceeding 20% from the S&P 500.
Yet the recent unexpected spike in inflation has left lasting scars for savers who worry their money may not go as far, according to a new survey from Natixis Investment Managers.
Here’s when Americans expect to retire, and what they could do more to better prepare.

Helovi | E+ | Getty Images

Americans are feeling more optimistic when it comes to retirement.
Just 21% Americans surveyed by Natixis Investment Managers said it will “take a miracle” to have a secure retirement, down almost half from 41% who said the same in 2021.

Part of that confidence stems from the S&P 500 index’s two consecutive years of returns exceeding 20% — half of survey respondents said those results made investing look easy, according to Natixis.
Yet 69% of the 750 Americans surveyed earlier this year said they still worry about instability and the potential financial impact.
Among their top retirement concerns are the possibility they may live longer than expected, the worry their Social Security benefits may be cut and the fear that high inflation could erode their retirement savings.

The recent, sudden big swing in inflation prompted people to save less, to worry their savings won’t go as far in the future and to feel that their investment gains have been whittled down, according to Dave Goodsell, executive director of the Natixis Center for Investor Insight.
“When they look at how they’re feeling about retirement, they feel good overall, but there are certain things that are making them uncomfortable,” Goodsell said.

The U.S. landed at No. 21 on Natixis’ new ranking of best countries for retirees, moving up one slot from the previous year. The ranking measures countries based on finances, wellbeing, health and quality of life. While strong finances and health helped bolster the country’s overall 70% score, that was offset by factors including income inequality, a slight increase in unemployment and a decline in happiness.

Americans expect to retire at 64, yet face a savings gap

How investors are preparing — and what they should do

The top move Americans are making to prepare for retirement — with 64% — is saving more and cutting expenses, according to Natixis’ survey.
That is followed by 47% who are creating long-term financial plans, 34% who are estimating future retirement costs and 32% who are seeking professional financial advice.
To better prepare, Americans ought to make getting professional help a higher priority, according to Goodsell.
A financial advisor can help sort out the “super complicated mathematical equation” that retirement planning requires, including how much savings is needed and what inflation may be in the future, Goodsell said.
“When you ask retirees what the number one thing [was] that helped them get to security, it was getting professional advice,” Goodsell said.

While many Americans strive for a $1 million nest egg, that may only yield about $40,000 annually if they withdraw funds based on the 4% rule in retirement, Goodsell said.
The 4% rule traditionally involves withdrawing 4% of a portfolio in the first year of retirement and then adjusting the rate in subsequent years for inflation.
Generally, retirement savers will want to strive for a higher balance in order to have more money to live on in their golden years, according to Goodsell.
Some surveys point to an amount aspiring retirees think they need to have saved.
To get a more accurate gauge of your retirement savings goals, start with the amount of money you anticipate needing your first year of retirement, Bill Bengen, the financial planner who invented the 4% rule, recently told CNBC.com.
Then, take 20 times that first year withdrawal amount to get a rough savings goal estimate, he said. More

CoreWeave Inc. signage in Times Square in New York, US, on Friday, May 9, 2025.
Yuki Iwamura | Bloomberg | Getty Images

CoreWeave shares jumped Tuesday on news that the cloud infrastructure company, which was one of the hottest IPOs of the year, launched a venture fund to invest in artificial intelligence startups.
CoreWeave, considered the largest publicly traded ‘neocloud’ name, offers cloud computing services specifically for AI workloads, such as providing Nvidia GPUs and high-performance storage to companies.

Its newly announced “CoreWeave Ventures” fund will offer founders an array of capital investment models, provide access to the CoreWeave cloud platform, and give insights on product and go-to-market strategies based on CoreWeave’s existing partnerships, the company said in a press release.
The shares gained 6% in premarket trading.

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CoreWeave this year

“Our aim with CoreWeave Ventures is to give other audacious, like-minded founders the support they need to drive technical advancements and bring to market the next class of innovation,” Brannin McBee, CoreWeave co-founder and chief development officer, said in the release.
CoreWeave, which itself is backed by Nvidia, is the latest example of a tech giant turning to the growing world of startups in an effort to gain more exposure to early-stage AI innovation. AI startups in the first half of the year alone raised $104.3 billion in the U.S., nearly matching all of 2024.
The company went public at $40 a share in late March. The shares then rallied to a high of $187 a share in June as retail traders clamored for a new AI name besides Nvidia to invest in, but since pulled back and closed Monday at $93.55 a share.
CoreWeave shares got a lift earlier Tuesday after neocloud competitor Nebius closed a five-year deal with Microsoft worth $19.4 billion to supply computing power to the hyperscaler, suggesting demand for AI infrastructure remains strong. More

The average rate on the 30-year fixed mortgage notched the biggest one-day drop in more than a year on Friday. 
Higher mortgage rates have helped keep many homebuyers on the sidelines. 
Now rates are finally coming down and some would-be buyers may be able to lock in even better deals with a few key money moves.

The average rate on the 30-year fixed mortgage notched its biggest one-day drop in more than a year on Friday. 
Although mortgage rates are now at their lowest level since October, the average rate for a 30-year, fixed-rate mortgage is still just around 6.29%, according to Mortgage News Daily — a big leap from the under 3% levels near the start of the pandemic.

But there are ways to get even better terms on a home loan, experts say.

Where mortgage rates stand

More signs point to an interest rate cut when the Federal Reserve meets on Sept. 17, which may offer a little more relief for would-be homebuyers.

Even though 15- and 30-year mortgage rates are fixed, cuts in the Fed’s target interest rate could provide some downward pressure, according to Lawrence Yun, chief economist at the National Association of Realtors.
However, “even in anticipation rate cuts, consumers should view 6% as the new normal through the early part of next year,” Yun said.
“Expecting 4% or 5% — I don’t think it will happen,” he added.

Three ways to get a lower mortgage rate

Regardless of where mortgage rates are heading, potential buyers have some control over the rates they will pay.
Here are a few key money moves to help secure the best terms on a home loan:
1. Improve your credit score
Your creditworthiness will ultimately determine what rate you can qualify for. “If you have a higher FICO score, you are going to get a better rate,” said Scott Lindner, national sales director, real estate & secured lending at TD Bank.
FICO scores, the most popular scoring model, range from 300 to 850. A “good” score generally is above 670, a “very good” score is over 740 and anything above 800 is considered “exceptional.”
For example, borrowers with a credit score between 780 and 850 could lock in a 30-year fixed mortgage rate of 6.19%, but it jumps to 6.39% for credit scores between 700 and 739. On a $350,000 loan, paying the higher rate adds up to an extra $13,000, according to data from LendingTree.

The best way to improve your credit score comes down to paying your bills on time every month, even if it is making the minimum payment due.
As a general rule, it’s also essential to keep revolving debt below 30% of available credit to limit the effect that high balances can have. 
Alternatively, “asking your credit card issuer for a higher credit limit can boost your score,” said Matt Schulz, LendingTree’s chief credit analyst. “That higher limit can help lower your utilization rate, but only if you don’t see that newly available credit as an excuse to spend.”
You may also be able to improve your credit score simply by fixing errors on your credit report, Schulz said. “Even a single late payment on your credit report can knock 50 points or more off of your credit score, so if there’s one listed wrongly on your report, you need to get it fixed.”
The length of your credit history is another important factor: A longer credit history helps raise your score because it provides lenders with a better understanding of how you manage your debt.
1. Boost your down payment
Additionally, if you put more money down on the home at the outset, you may be able to secure a better rate from lenders, according to Lindner.
Borrowers who put 20% down “would definitely get a lower mortgage rate,” Yun also said, “because there is more skin in the game and lenders are more willing to lend.”
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Yet, for many Americans, putting 20% down on a house “is just not realistic,” according to Schulz.
In fact, the average down payment was 18% for all home buyers in 2024, and just 9% for first-time home buyers, according to the National Association of Realtors.
“However, if you can do it, the savings can be massive,” Schulz said. Not only would putting 20% down save you tens of thousands of dollars in interest over the life of the loan, but it could also save you thousands of dollars a year by avoiding private mortgage insurance, Schulz added. “It’s a really big deal.”
3. Think beyond a 30-year fixed
Finally, “don’t put yourself in a position where you think a 30-year mortgage is your only option,” Lindner said. In fact, more buyers are considering adjustable-rate mortgages, or ARMs, which offer lower initial rates than fixed-rate loans. 
An ARM could shave as much as half a point off your rate, Lindner said. Currently, the rate for a 7/6 ARM is 5.59%, according to Mortgage News Daily.
“A seven-year ARM gives people the chance to take advantage of a lower rate today,” Lindner said — and “if you think rates will go down, you can always refinance in the future.”

For that reason, ARMs have been growing in popularity, according to Yun. About 90% of consumers get a 30-year fixed, he said, but tapping an ARM is a good way to get into the market.
Still, whether this is the right option also depends on your time horizon, Yun added. Generally, ARMs make the most sense for buyers who are looking at a short timeline, particularly for “people in the late 20s or 30s, who may trade up,” he said.
Otherwise, you risk ending up with an interest rate down the road that is substantially higher than a fixed-rate loan.
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The $1.787 billion Powerball jackpot has two winners from tickets purchased in Texas and Missouri — and one could face a bigger tax bill.
The winners can pick between two pretax options: a lump sum of $410.3 million or an annuitized prize of $893.5 million.
However, the Missouri ticket holder could pay millions more in taxes.

Scott Olson | Getty

There are two big winners for the $1.787 billion Powerball jackpot — and one could face a bigger tax bill.
Winning tickets sold in Missouri and Texas matched all six numbers from Saturday night’s drawing, and those individuals will split the second-largest lottery jackpot, according to Powerball.

Each ticket holder can pick between two pretax options: a lump sum of $410.3 million or an annuitized prize of $893.5 million. The annuity consists of one upfront payment, followed by 29 annual payments that increase by 5% each year.   
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“Virtually everybody who wins the lottery picks the lump sum distribution,” Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners, previously told CNBC. “And I think that’s a mistake.”
In some cases, the annuity is a better option because “the typical lottery winner doesn’t have the infrastructure in place to manage such a large sum so quickly,” he said.
But either way, the winners will face a hefty tax bill. Here is what they can expect.

Roughly $98.5 million withheld for the IRS

Both Powerball jackpot winners will face an automatic federal tax withholding. For prizes over $5,000, the IRS requires a mandatory 24% withholding.
If the winners choose the $410.3 million lump sum payment, the 24% federal withholding reduces their prize by roughly $98.5 million.

How the federal tax brackets work

The next Powerball jackpot winner will easily land in the 37% federal income tax bracket, regardless of whether they choose the lump sum or yearly payments.For 2025, the 37% rate applies to individuals with taxable income exceeding $626,350 and married couples filing jointly with taxable income of $751,600 or more for 2025.
You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

But the 37% rate doesn’t apply to all of your taxable income.
For 2025, single filers pay $188,769.75 plus 37% of the amount over $626,350. Meanwhile, joint filers pay $202,154.50 plus 37% of the amount over $751,600.
The jackpot winners’ remaining tax bill after the 24% federal withholding depends on several factors, but could easily represent millions more.
President Donald Trump’s “big beautiful bill” raised the standard deduction, among other breaks, which could reduce taxable income for many filers in 2025.

Missouri winner could owe millions in state taxes

On top of federal taxes, the Missouri ticket holder could also owe millions in state income taxes.
In addition to the 24% federal withholding, the Missouri Lottery is required to withhold 4% for state income taxes for prizes over $600. That could reduce winnings by about $16.4 million if the winner chooses the lump sum. But the bill could be higher since Missouri’s top income tax rate is 4.7% for 2025.
Meanwhile, Texas does not tax lottery winnings, which means that ticket holder could pay millions less.
Powerball isn’t the only chance to win big. The jackpot for Tuesday night’s Mega Millions drawing now stands at an estimated $358 million. The chance of hitting the jackpot in that game is roughly 1 in 290.4 million. More

Your monthly student loan bills may seem more daunting amid a slowing job market.
CNBC spoke to experts about to do with your student loans if you’re unemployed or struggling to find a better job.

Srdjanns74 | Istock | Getty Images

If you’ve recently lost your job or are struggling to find a new one, your student loans are probably causing you more stress than usual.
The job market is flashing warning signs, with the U.S. economy adding just 22,000 positions in August, which was below expectations, according to a Bureau of Labor Statistics report on Sept. 5. At the same time, the unemployment rate ticked up to 4.3%, its highest level in almost four years.

“The slowdown in job creation might make some recent college graduates and borrowers worried,” said higher education expert Mark Kantrowitz.
More than 40 million Americans hold student loans, and the total outstanding debt exceeds $1.6 trillion.
CNBC spoke to experts about to do with your student loans if you’re unemployed or unable to find a better job at the moment.

Try getting a lower monthly payment

You may be able to pause bills

Borrowers who’ve been laid off may also be eligible for an Unemployment Deferment. Under that option, the Education Department often allows you to pause your payments if you’re receiving unemployment benefits or looking for and unable to find full-time employment, among other requirements. (Some student loans will still accrue interest during the payment pause, while others will not.)
There’s also the Economic Hardship Deferment, for those who may be receiving public assistance or earning below a certain income level. 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 estimated. Those signed up for the unemployment deferment rose to 180,000 from 140,000 over that period.
There is usually a three-year lifetime limit for the unemployment deferment and economic hardship deferment, he said.
Recent legislation will do away with both the Unemployment Deferment and Economic Hardship Deferment for those who take out student loans after July 1, 2027. But current borrowers will maintain access to the relief options.

If you don’t qualify for either of those deferments, more student loan borrowers are eligible for a general forbearance.
Whenever a borrower applies for a period of nonpayment, they should find out if interest will accrue on their debt in the meantime. If it does, they’ll have a larger balance when their payments resume. Making payments during the deferment or forbearance to at least cover the loan interest on your debt can avoid that outcome, Kantrowitz said.
Those with private student loans may find they have fewer options after a layoff. However, experts recommend explaining to your lender that you’ve lost your job and asking what help might be available. More

About 22,000 jobs were added for the month of August, while the unemployment rate rose to 4.3%, according to a Bureau of Labor Statistics report on Friday. Economists surveyed by Dow Jones had been looking for payrolls to rise by 75,000.
While artificial intelligence has caused turbulence in the labor market, the decline in job opportunities has more to do with the economic uncertainty, experts say.
Still, that doesn’t mean that AI’s impact has been “zero,” said Cory Stahle, senior economist at job site Indeed.

BartekSzewczyk | Getty Images

While artificial intelligence has caused turbulence in the labor market, the recent decline in job opportunities has more to do with economic uncertainty, experts say.
“As we look across the broader labor market, we see that AI’s impact on the labor market has still been fairly small,” said Cory Stahle, a senior economist at Indeed, a job search site. 

“The important asterisk is that that doesn’t mean that it has been zero,” he said. 
Mandi Woodruff-Santos, a career coach, agrees, “I don’t think AI is to blame, I think the economic uncertainty is to blame.”

The state of the job market

The job market has not been good in recent months, whether you’re looking for a job or currently employed.
The U.S. economy added about 22,000 jobs for the month of August, while the unemployment rate rose to 4.3%, according to a Bureau of Labor Statistics report on Friday. Economists surveyed by Dow Jones had been looking for payrolls to rise by 75,000.

Of those who are still employed, some are “job hugging,” or “holding onto their job for dear life,” according to an August report by Korn Ferry, an organizational consulting firm.

But others are “quiet cracking,” which is a “persistent feeling of workplace unhappiness that leads to disengagement, poor performance, and an increased desire to quit,” according to cloud learning platform TalentLMS.
Growing economic uncertainty has kept workers from quitting their jobs and has led businesses to slow down hiring decisions, experts say.
“No business knows what the heck the Trump administration is going to do next with the economy,” said Woodruff-Santos.
“And in this kind of economic climate, companies are not sure of anything, and so they’re being very conservative with the way that they’re hiring,” she said.

How artificial intelligence is impacting the labor force

While some companies have announced layoffs to pursue AI technologies in their organizations, most of the impact has been isolated in the tech industry, said Indeed’s Stahle. 
Most recently, Salesforce CEO Marc Benioff said the company laid off about 4,000 customer support roles, due to advancements in the company’s use of artificial intelligence software.
Other studies show AI has mostly affected younger workers rather than mid-career employees. 
An August report by Stanford University professors found that early career workers (ages 22 to 25) in the most AI-exposed occupations experienced a 13% decline in employment. On the flip side, employment for workers in less exposed fields and more experienced workers in the same occupations has either stayed the same or grown.
The study also found that employment declines are concentrated in occupations “where AI is more likely to automate rather than augment human labor.” 
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Yet, the tech industry itself is not a large sector, said Stahle. According to a March 2025 analysis by nonprofit trade association CompTIA, or the Computing Technology Industry Association, “net tech employment” made up about 5.8% of the overall workforce.
Net tech employment is a designation that represents all those employed in the industry, including workers in technical positions such as cybersecurity and business professionals employed by technology companies, as well as full-time and self-employed technology workers.
For AI-driven layoffs to be considered a broad threat to the job market, the technology needs to start impacting other sectors, such as retail and marketing, said Stahle.

‘We’re seeing more and more demand for AI skills’

Some predictions on AI’s workforce impact contend that employers may be more likely to retrain workers rather than lay them off, according to a new report by the Brookings Institution, a public policy think tank.
“AI may be more likely to augment rather than fully replace human workers,” the authors wrote.
In fact, “we’re seeing more and more demand for AI skills,” said Stahle.

If you have the opportunity, experts say, it’s smart to learn how your field and employer are using AI. 
“You’d be foolish not to do the research into your own field,” and understand how AI can be a tool in your industry, said Woodruff-Santos. 
Look for training programs or webinars where you can participate or free trials of AI tools you can use, she said.
Correction: A new report came from the Brookings Institution. An earlier version misstated the name of the organization.

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Two drilling rigs are pictured in Midland, Texas, U.S., Oct. 8, 2024.
Georgina Mccartney | Reuters

Many pundits are expecting major indices to be volatile due to macro uncertainty. Moreover, on average, September has historically been the worst month for U.S. stocks.
Investors seeking consistent income despite a volatile market can consider adding dividend-paying stocks to their portfolios. To this end, they can rely on the recommendations of top Wall Street analysts, who with their expertise can help select attractive dividend stocks with strong fundamentals.

Here are three dividend-paying stocks, highlighted by Wall Street’s top pros, as tracked by TipRanks, a platform that ranks analysts based on their past performance.

Archrock

This week’s first dividend pick is Archrock (AROC), an energy infrastructure company with a primary focus on midstream natural gas compression. The company paid a dividend of 21 cents per share for the second quarter, an increase of about 11% over the first-quarter dividend. At an annualized dividend of 84 cents, AROC offers a yield of 3.3%.
In a recent research note, Mizuho analyst Gabriel Moreen updated the models and price targets for master limited partnerships (MLPs) and midstream companies. Moreen reiterated a buy rating on Archrock stock and modestly raised the price forecast to $32 from $31. Interestingly, TipRanks’ AI Analyst has an “outperform” rating on AROC stock with a price target of $27.
Moreen said AROC continues to “distinguish itself with exceptional balance sheet flexibility,” which allows it to deliver not only solid capital returns like its $28.8 million share repurchase in the second quarter, but also supports higher capital spending and dividend expansion.
Notably, the 5-star analyst highlighted that AROC indicated that it expects its dividend to increase consistently with recent dividends per share growth, if the business performs. Consequently, Moreen increased his dividend per share estimates for fiscal 2025, 2026, and 2027 to 83 cents, 93 cents and $1.02, reflecting a year-over-year growth of 20%, 12% and 10%, respectively.

The analyst stated that AROC demonstrated strong operational momentum by raising its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) guidance for the second consecutive quarter, although there were some one-time items. Moreover, Moreen believes that Archrock’s aggressive capex outlook stands out, as it clearly indicates that the company is seeing solid demand for new orders despite the volatility following “liberation day.”
Moreen ranks No. 112 among more than 10,000 analysts tracked by TipRanks. His ratings have been profitable 76% of the time, delivering an average return of 13.9%. See Archrock Ownership Structure on TipRanks.

Brookfield Infrastructure Partners

Next up is Brookfield Infrastructure Partners (BIP), a leading global infrastructure company that owns and operates diversified, long-life assets in the utilities, transport, midstream and data sectors. BIP declared a quarterly distribution of 43 cents per unit payable on Sept. 29, reflecting a 6% year-over-year increase. BIP stock offers a dividend yield of 5.6%.
Recently, Jefferies analyst Sam Burwell resumed coverage of Brookfield Infrastructure stock with a buy rating and a price target of $35. In comparison, TipRanks’ AI Analyst has a price target of $34 but a “neutral” rating.
Burwell stated that BIP remains a “unique beast” with an expanding footprint. He noted three significant acquisitions since April – the Colonial Pipeline, rail car leasing with GATX, and the Hotwire fiber-to-home business, all of which were U.S.-focused and highly contracted. Additionally, all three have strengthened BIP’s midstream, transport, and data businesses, respectively.
“While BIP’s broad footprint remains complex, we tend to view positively that the YTD acquisitions have been in the US and that most of the divestitures have been ex-North America,” said Burwell.
The top-rated analyst contended that while BIP stock has stagnated over the last few years, its upcoming investor day provides an opportunity to help the market better understand the transactions made in 2025. Burwell expects BIP’s funds from operations (FFO) to grow at a nearly 9% compound annual growth rate (CAGR), excluding to-be-announced capital recycling. Burwell also expects solid distribution growth at about 6.5% CAGR through 2027.
Burwell ranks No. 848 among more than 10,000 analysts tracked by TipRanks. His ratings have been successful 64% of the time, delivering an average return of 15.7%. See Brookfield Infrastructure Statistics on TipRanks.

Permian Resources

Another dividend-paying energy stock is Permian Resources (PR). It is an independent oil and natural gas company having assets in the Permian Basin, with a concentration in the core of the Delaware Basin. The company declared a base dividend of 15 cents per share for the third quarter of 2025, payable on Sept. 30. At an annualized dividend per share of 60 cents, PR stock offers a dividend yield of 4.3%.
Recently, Goldman Sachs analyst Neil Mehta reaffirmed a buy rating on Permian stock with a price forecast of $17. Likewise, TipRanks’ AI Analyst has an “outperform” rating on PR stock with a price target of $16.50.
Mehta highlighted that Permian Resources continued to ramp its operations in the second quarter across the acquired assets from APA Corp. and other smaller bolt-on acquisitions. Moreover, the company announced new transportation and marketing agreements to enhance oil and natural gas netbacks, which are estimated to drive incremental free cash flow of over $50 million in 2026 compared with 2024.
Despite the uncertainty around oil prices, the 5-star analyst remains bullish on Permian Resources, given its cost optimization efforts and focus on delivering higher free cash flow per share. The analyst noted management’s commentary about PR’s solid balance sheet, which allows it to make strategic investments without disrupting its capital allocation priorities, such as increasing cash on the balance sheet, share repurchases, and debt reduction.
“We believe PR’s focus on opportunistically acquiring high-quality assets along with consistent grassroots acquisitions can drive long-term shareholder value,” said Mehta.
Mehta ranks No. 670 among more than 10,000 analysts tracked by TipRanks. His ratings have been successful 59% of the time, delivering an average return of 9%. See Permian Resources Insider Trading Activity on TipRanks. More

The U.S. Department of Education’s deferments and forbearances — or payment pauses — can help student loan borrowers avoid the harsh consequences of falling behind on their bills, consumer advocates said.
But the terms of the relief vary, and can leave borrowers with a larger balance.
“Spending too much time in forbearance and deferment just means it will take you longer to eliminate your debt,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.

Damircudic | E+ | Getty Images

There’s been a sharp uptick in the number of student loan borrowers hitting the pause button on their monthly bills.
The U.S. Department of Education offers two primary ways to postpone your payments — deferments and forbearances.

Between those statuses, more than a quarter of the country’s over 40 million federal student loan borrowers had suspended their repayment progress during the third quarter, according to a recent analysis by higher education expert Mark Kantrowitz. That’s more than double the number of such borrowers with payments paused during the same period in 2024.
Here’s what to know about those relief options, and their possible consequences.

Tools to postpone payments can be ‘critical’

Deferments and forbearances can help student loan borrowers avoid the harsh consequences of falling behind on their bills, consumer advocates said.
“These tools to postpone payment can be critical to preventing borrowers who don’t have the ability to pay from defaulting,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.
“Default results in big dings to credit scores, wage and tax refund garnishment as well as large collections costs being added to the loans,” Mayotte added.

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Borrowers who can’t afford their payments should explore the options for pausing their payments and potentially apply for one with the Education Department or their loan servicer, she said.

Borrowers may avoid interest in deferment

The biggest difference between a deferment and a forbearance is whether or not you’ll pay interest during the payment pause. During a deferment, interest may not accrue on certain Direct Loans, a category that covers most federal student debt, according to the Education Department.
More specifically, the government doesn’t typically charge interest to borrowers with subsidized loans while they’re in a deferment, Kantrowitz said.
As a result, if you hold those loans and are struggling to meet your bill, you should first explore if you qualify for a deferment. Some of the deferments available include a Rehabilitation Training Deferment for those enrolled in a program providing “vocational, drug abuse, mental health, or alcohol abuse” treatment, the Cancer Treatment Deferment and Unemployment Deferment. (Borrowers in the Cancer Treatment Deferment won’t be charged interest whether or not their loans are subsidized.)

There’s also the Economic Hardship Deferment, for those who may be receiving public assistance or earning below a certain income level. 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 estimates.
There is usually a three-year lifetime limit for the unemployment deferment and economic hardship deferment, he said.

Forbearances are costly

During a so-called general forbearance, the Education Department usually charges interest on all types of Direct Loans, the agency says. As a result, these payment pauses can prove costly. (You can enter a forbearance for any reason.)
The typical federal student loan borrower can see their debt grow by $219 a month in interest charges alone while they pause their payments in a forbearance, 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%.)
For some borrowers, those charges will be better than the alternative, Mayotte said, “That is still better than having the loan go past due or defaulting.”
As of now, borrowers can be in a general forbearance for up to three years over the life of the loan, although recent legislation will change the limit to nine months out of every 24 months as of July 1, 2027.

Either way, ‘not long-term strategies’

Deferments and forbearances are “not long-term strategies for eliminating debt,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.

While postponing your bills can provide temporary relief, borrowers are always better off finding an affordable way to repay their debt.
Some income-driven repayment plans, or IDRs, cap your bill at a share of your income — and you may owe as little as $10 or even $0 a month, Nierman said. You can also be making progress toward loan forgiveness under an IDR plan; that momentum is often stalled during a forbearance or deferment.
“Spending too much time in forbearance and deferment just means it will take you longer to eliminate your debt,” Nierman said.

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