- Two out of three student loans are not actively repaid, and a quarter of the loans that require payment are already delinquent.
- The proposed settlement could force 7.7 million borrowers to resume payments after five years, which could add nearly 2 million new delinquent borrowers.
- Longer-term repayment is becoming more common, with the share of borrowers repaying for more than a decade doubling since 2015.
The vast majority of student loans in the U.S. are still effectively on pause, and delinquency rates are rising again, according to New data from the nonpartisan California Policy Lab (PDF file). The analysis, released Wednesday and based on credit bureau records through the third quarter of 2025, provides one of the clearest pictures yet of a payment system strained by policy politics, legal uncertainty, and the lingering effects of pandemic-era payment stops.
CPL finds it Only 33% of outstanding student loans are repaid on timeIt is the lowest on-time payment rate in two decades outside of the official pause due to the pandemic. The remainder is in deferment, forbearance, delinquency, or an income-based repayment plan that requires no payment.
The share of loans in deferment or forbearance alone has doubled since mid-2023 It now represents 49% of all loans.
The payment stopped which created the chaos
The high non-payment rates reflect the unusual circumstances witnessed in the past five years. Federal student loan payments are paused from 2020 through August 2023, followed by a year-long “introductory phase” during which late payments are not reported to the credit bureaus. Once this grace period expired in late 2024, the delinquency rate rose.
By mid-2025, One in seven borrowers is at least 30 days latethe highest delinquency rate ever recorded in CPL data streams. Although the delinquency rate fell slightly in the third quarter, the shift came largely because many borrowers moved into deferment or forbearance rather than resuming payments. Half of those who exited delinquency did not return to repayment on time.
The recent rise in administrative relief cases is closely tied to ongoing court challenges to the Biden administration’s previous SAVE reimbursement plan. These legal disputes have effectively pushed millions of accounts into temporary non-payment status until the courts reach a final decision. As CPL points out, this means that many borrowers have yet to face true repayment requirements.
The end of conservatorship will restart payments for more than 7 million borrowers
The proposed settlement announced by the US Department of Education this week could significantly change the course of the payment system. Under the terms of the settlement 7.7 million borrowers registered in the SAVE program who have not made their payments since 2020 will be required to resume repayment obligations..
If these borrowers become delinquent at the same rate as current payers, roughly 2 million additional borrowers It could fall behind quickly, CPL estimates.
This shift comes at a time when many families are already struggling with rising costs of living, rising credit card balances, and tightening budgets. CPL warns that financial stress can spread outward, affecting households’ ability to save, pay rent or maintain a good standing with respect to other debts.
Longer repayments are becoming the norm
Beyond immediate concerns about late payments, CPL’s analysis highlights a broader trend: Borrowers repay loans over much longer periods of time.
The average age of a borrower’s oldest open student loan rose from 6.5 years in 2015 to 8.9 years in 2025 — an increase of 36%. The share of borrowers repaying loans for more than 10 years doubled over the same period, rising from 22% to 40%. Repayment extensions of more than 20 years, previously rare, are now five times more common.
Much of this shift stems from the growing use of income-driven repayment plans, which typically last 20 to 25 years and require lower monthly payments. Looking ahead, the new Repayment Assistance Plan (RAP) will extend repayment terms to 30 years for many borrowers.
CPL notes that longer timelines may ease budget pressure in the short term, but could delay key milestones such as home buying, saving, and starting a family.
What does this mean for borrowers?
The combination of rising default rates, looming restart plans, and extended repayment timelines points to a volatile year for borrowers.
Many families may face financial stress not only from resuming student loan bills but also from rising costs in general — including housing, transportation, and food. Those who have entered an administrative deadline due to legal disputes may not be ready to resume payments.
Borrowers struggling to resume repayment may need to explore income-based options, although these programs themselves are in a transition phase. Although it may not be ideal, it is much better than defaulting on your student loans.
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