Fewer people are falling severely behind on their student loan payments, but the amount of past-due education debt remains elevated, the Federal Reserve Bank of New York said Tuesday.
In their latest Household Debt and Credit Report, New York Fed researchers found the pace of serious delinquencies began to slow in the second quarter of the year, following a jump in past-due bills after the Education Department ended a lengthy pause on payments.
About 10.6 percent of student loan balances were at least 90 days past due in the second quarter, up from 10.3 percent in the first quarter. That is close to where serious delinquency stood before the pandemic, when the rate hovered around 11 percent. Researchers said on a call with reporters Tuesday that the data indicates student loan delinquencies are stabilizing.
Yet they said the delinquencies could worsen as about 8 million borrowers exit a Biden-era repayment plan commonly known as Save — or Saving on a Valuable Education. The defunct plan offered low monthly payments and a faster path to student loan forgiveness that advocates say was unmatched by any other repayment plan.
Even if delinquencies remain steady, there are still a high number of people in default on their student loans. One in 5 federal student loan borrowers — about 9.5 million people — were in default as of March, meaning they are more than nine months behind on their payments, according to the latest data from the Education Department.
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