Surge in Student Loan Delinquency Rates Amid Policy Changes

Recent research from The Century Foundation indicates a significant rise in student loan delinquency rates, with nearly 25% of borrowers currently behind on payments, a stark increase from approximately 9% in 2019. This surge translates to around 7.9 million borrowers entering delinquency in the first three quarters of 2025 alone. The analysis utilized data from the University of California Consumer Credit Panel, a representative sample of U.S. adults with credit records.

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The report attributes the increase in delinquencies to policies enacted during President Donald Trump's second term. Peter Granville, a fellow at The Century Foundation, criticized these policies for obstructing access to programs designed to assist struggling borrowers, thereby exacerbating their financial difficulties. In contrast, Ellen Keast, press secretary for higher education at the Education Department, contended that the Biden administration's relief measures had previously masked delinquency rates, arguing that the current spike is misleading.

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The student loan landscape has faced numerous changes, particularly with the termination of the Biden administration's Saving on a Valuable Education (SAVE) plan, which was intended to provide affordable repayment options. Legal challenges led to the plan's blockage, and the expiration of pandemic-related protections has left borrowers vulnerable to collection activities and negative credit reporting. As a result, approximately 2 million borrowers have seen their credit scores plummet, averaging a drop from 680 to 580.

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The Education Department announced plans to resume collection activities against defaulted borrowers but has frequently paused these efforts. Mark Kantrowitz, a higher education expert, noted that cuts to the federal workforce during Trump's administration have likely worsened repayment challenges for borrowers. The termination of thousands of staff members, including those who assisted borrowers, has raised concerns about the support available to those facing financial difficulties.

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The delinquency crisis disproportionately affects specific demographics, particularly in Southern states. The analysis revealed that nearly 40% of federal student loan borrowers in Louisiana and Mississippi are delinquent, the highest rates in the nation. Furthermore, racial disparities are evident, with over 48% of Black borrowers and around 30% of Hispanic borrowers falling behind on payments, compared to 20% of white borrowers.

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While the Century Foundation's report highlights the adverse effects of policy changes on borrower delinquency, the Education Department's perspective suggests that the current situation is a return to normalcy following temporary relief measures. This discrepancy underscores the complexity of the student loan landscape and the varying interpretations of the data.

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• “By blocking access to the very programs designed to help struggling borrowers, Donald Trump is trapping millions in a spiral of debt that is destroying their credit scores and locking them out of homeownership, buying a car and other life milestones,” — Peter Granville, Fellow, The Century Foundation

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• “The idea of a sudden increase in delinquencies in student loans is a misnomer,” — Ellen Keast, Press Secretary for Higher Education, Education Department

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• “When you get rid of people who help borrowers face financial challenges, is it any surprise that these borrowers encounter problems dealing with debt?” — Mark Kantrowitz, Higher Education Expert

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The ongoing challenges in the student loan sector highlight the need for comprehensive policy solutions to address the rising delinquency rates and support affected borrowers.

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