To maintain and regenerate adult tissues after injury, division and differentiation of tissue-resident stem cells must be precisely regulated. It remains elusive which regulatory strategies prevent exhaustion or overgrowth of the stem cell pool, whether there is coordination between multiple mechanisms, and how to detect them from snapshots. In Drosophila testes, somatic stem cells transition to a state that licenses them to differentiate, but remain capable of returning to the niche and resuming cell division. Here, we build stochastic mathematical models for the somatic stem cell population to investigate how licensing contributes to homeostasis. We find that licensing, in combination with differentiation occurring in pairs, is sufficient to maintain homeostasis and prevent stem cell extinction from stochastic fluctuations. Experimental data have shown that stem cells are competing for niche access, and our mathematical models demonstrate that this contributes to the reduction in the variability of stem cell numbers but does not prevent extinction. Hence, a combination of both regulation strategies, licensing with pairwise differentiation and competition for niche access, may be needed to reduce variability and prevent extinction simultaneously.