One in four people with a student loan due is behind on their payments, nearly three times the delinquency rate as that before the coronavirus pandemic brought repayment to a halt, according to a report released Friday.
A trove of federal data separately shows that increasing numbers of borrowers are barreling toward full-blown default on their student loans, putting them at risk of having their wages seized and making it harder to buy a car or even rent an apartment — all of which could impact the economy.
The report released Friday by two left-leaning groups — the Century Foundation and Protect Borrowers — largely blames the crisis on Trump administration actions, including the government’s decision to temporarily suspend applications for some of the most affordable loan repayment plans, delay the processing of those forms and reject applicants en masse. The groups say those actions have cut off the lifeline that income-driven repayment plans offer and deterred borrowers from getting a handle on their debt.
But some higher education experts say the accusations leveled in the report ignore the problem’s complexities and the shortcomings of Biden-era policies that gave borrowers little reason to stay on top of their payments.
Understanding the dynamics of the payment problem is critical, as economists warn that it could get much worse. The arguments reveal deep divisions over the root causes of why so many people are not repaying their loans and what the federal government should do to help.
“It’s a perfect storm that has taken borrower distress to another level,” said Aissa Canchola Bañez, policy director at Protect Borrowers, a group that advocates for alleviating student debt.
The authors of the new report used data from the University of California Consumer Credit Panel for their analysis.
Other data confirm a historic rise in missed payments. A report released this month by the Federal Reserve Bank of New York shows the flow of student loans into early delinquency — at least a month past due — stood at 16.35 percent at the end of 2025, compared to 9.4 percent at the close of 2019. Student loan borrowers are transitioning into delinquency at a faster rate than at any other time in at least 20 years.
While the trend of past due payments is indisputable, the Education Department says it’s a mischaracterization of the factors at play for the report’s authors to blame the Trump administration. Agency officials said there was only one month last year in which borrowers could not access the application for income-driven repayment plans, which tie payments to earnings and family size with the promise of eventual loan forgiveness.
The department suspended the form in February 2025 after a court order blocking President Joe Biden’s Saving on a Valuable Education repayment plan, known as Save, raised questions about the legality of other income-driven options. The agency said it had to make changes to the form, which is used to enroll in all income-driven repayment plans, to comply with the court ruling. Officials said the ongoing litigation is also responsible for the hundreds of thousands of applications that have been rejected or stuck in limbo since the court order.
After a ruling in the case, the Education Department instructed its loan servicers to deny borrowers who had selected the “lowest payment amount” on their income-driven repayment application, because it would be the contested Save plan. Several loan servicers said the majority of 734,221 pending applications are also from people who wanted to enroll in Save. In both cases, the Education Department is encouraging borrowers to select an alternative repayment and notes that servicers have processed about a quarter million applications a month.
Education Department spokesperson Ellen Keast said the real culprit behind the looming default cliff is the “reckless” student loan policies of the previous administration. She criticized Biden’s decision to repeatedly extend a payment pause that began in the first Trump administration, and the implementation of a 12-month grace period after payments restarted in October 2023. Those actions and the controversial attempts at widespread student loan forgiveness, she said, have lulled borrowers into believing their loans wouldn’t need to be repaid.
“The Biden administration masked delinquency and default rates,” Keast said. “Because of their irresponsible and unlawful policies, the federal student loan portfolio is at a fiscal cliff.”
Bañez, at Protect Borrowers, said the notion that people don’t want to repay their debt ignores the reality of the hundreds of thousands of borrowers who have been trying to enroll in a low-cost plan. She and her co-authors say the Trump administration could have pursued policies to smooth the transition back to repayment, but chose to leave people in the lurch as higher prices for groceries, utilities and other necessities have stretched them thin.
“We’ve been living through an unprecedented affordability crisis, and the student loan delinquency and default crisis stems from and exacerbates this crisis,” Bañez said. “The same folks who are struggling to keep up with their student loan payments are also struggling to keep up with the rising costs.”
Preston Cooper, a senior fellow at the conservative think tank American Enterprise Institute, argues that the economy doesn’t look all that different from 2019 and that research shows that borrowers with high credit scores and high incomes are missing payments — people who should be in a position to pay.
“This is an administrative and communications challenge, more than anything,” Cooper said. “When you have loan payments turned off for several years, and you try to turn them back on, it’s just going to be a major challenge and one that we’re not meeting right now.”
Cooper and Sarah Sattelmeyer at New America, a center-left think tank, said problems in the repayment system span many administrations. They called for systemic reforms, including more automation and upgrades to technology. Sattelmeyer, the project director for education, opportunity and mobility on New America’s higher education program, said the payment system is overly complex and “not designed to provide a streamlined pathway for borrowers to get back on their feet.”
She and other higher education experts say both administrations could have done more to communicate the resumption of payments. The Education Department said it has sent nearly 20 million emails to borrowers in delinquency and default, urging them to reenter repayment and highlighting repayment tools.
When more than a million borrowers saw their credit scores dip in the first three months of 2025, many complained of not realizing payments had resumed. Student loan servicers say many of those people have brought their loans back into good standing, but other distressed borrowers are ignoring them.
“The people with the most severe delinquencies are not answering phone calls, not clicking on emails … there’s no active engagement,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance trade group. He said some servicers are reporting that only 4.4 percent of people in default are engaging at all.
Karoline, a 60-year-old borrower in Los Angeles who spoke on the condition that her last name be withheld because she is in default, said she feels stuck. Her poor health has kept her from holding down a steady job, she said, and made repaying the $30,000 she owes from design school seem impossible.
“I lay awake at night thinking, what can I possibly do to pay this debt? Sometimes I can barely afford to keep the lights on,” Karoline said. She said she hasn’t been in touch with her loan servicer, in part, because she is embarrassed.
In some ways, payment behavior has returned to pre-pandemic days, when loan defaults were stubbornly high. Back then, about a million people went into default a year, roughly the same number who defaulted on their federal student loans last year, according to the Federal Reserve Bank of New York.
Student loan borrowers are considered in default after missing 270 days of payments. Nearly 9 million people are at least that late, with 5.2 million of them more than 360 days behind as of Sept. 30, according to the latest Education Department data.
In response to the high default rates, the Education Department on Wednesday implored colleges and universities to do more to counsel former students who are behind on their loans.
Peter Granville, a fellow at the Century Foundation, said he anticipates that delinquencies and defaults could climb much higher when the 7 million people on the beleaguered Save plan are forced to exit.
The federal government has postponed payments for those borrowers, through forbearance, since 2024 because of the ongoing Save lawsuit. In December, the Education Department reached a settlement with seven states to resolve the lawsuit. If the court approves the deal, borrowers will have to quickly find a new plan.
Granville noted that many Save enrollees have incomes so low that they qualified to have zero monthly payments, which means they will likely struggle to afford any of the more expensive student loan repayment plans.
“This is not simply a return to normalcy in the repayment system,” Granville said. “We could see waves of delinquencies and defaults, and the ripple effects on the economy will be felt widely.”
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