The Challenge of Restarting Federal Student Loan Payments

After an extraordinary three-year pause on federal student loan payments due to the pandemic, a significant number of borrowers resumed repayment when billing restarted. However, an almost equal number of borrowers have not, creating a complex situation for the government in its efforts to collect the $1.6 trillion debt owed.

As of the end of March, nearly 20 million borrowers were actively making payments on their student loans, while almost 19 million were not, resulting in delinquent accounts, defaults, or continued pauses, according to the latest Education Department data.

“The nonpayment rate is a clear indication of a system that is not functioning effectively,” said Persis Yu, managing counsel for the Student Borrower Protection Center, an advocacy group.

At the close of 2023, seven million borrowers with federally managed loans were at least 30 days behind on payments, representing the highest delinquency rate since 2016. Due to a policy enacted by the Biden administration, these borrowers will not face penalties for nonpayment until at least October.

Additionally, millions of borrowers have had their accounts frozen through deferment or forbearance options, allowing them to temporarily halt payments. Nearly six million borrowers still find themselves in default since before the pandemic began.