Student Loan Borrowers Face Increased Delinquency as Payment Pause Ends and IDR Applications Resume
Approximately 9.7 million borrowers fell past due on student loans post-payment pause, while access to income-driven repayment programs has been restored.
Overview
Following the end of the Covid-era student loan payment pause, about 9.7 million borrowers are now delinquent. The New York Fed warns that delinquency rates could exceed pre-pandemic levels, as borrowers’ credit health declines. Meanwhile, the Department of Education announced the reopening of applications for various income-driven repayment plans after a pause due to a legal ruling against the Biden administration's SAVE plan. While applications are available, loan servicers have not yet resumed processing them, leaving borrowers in uncertainty regarding their repayment options.
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Analysis
- Student loan delinquency is on the rise, with estimates indicating that 15.6% of federal student loans are past due as of the end of the off-ramp period
- Access to student loan repayment programs has been restored after a temporary pause due to legal challenges against the Biden administration's initiatives
- Legal and administrative decisions regarding income-driven repayment plans have created uncertainty for borrowers, impacting their financial stability.
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