The pandemic brought an unprecedented three-year pause on federal student loan payments, but as billing resumed late last year, millions of borrowers found themselves in a dilemma. While some have resumed repaying their debts, nearly as many have not, leading to a complex situation for the government’s efforts to collect the $1.6 trillion owed.
According to the latest data from the Education Department, approximately 20 million borrowers have resumed making payments as scheduled, while nearly 19 million are either delinquent, in default, or still on pause. This nonpayment rate reflects a system that is struggling to function effectively, as noted by Persis Yu, the managing counsel for the Student Borrower Protection Center.
In addition to those facing overdue payments, millions of borrowers have had their accounts frozen through deferment or forbearance, and around six million remain in default from before the pandemic. The reasons for nonpayment vary, with some citing affordability issues, bureaucratic complications, or taking advantage of the current “on-ramp” period that allows late payments without penalties until September.
President Biden’s efforts to fix the federal loan program and provide relief to borrowers have faced challenges, including legal setbacks and delays in implementing repayment changes. Despite these hurdles, the administration has made strides in canceling billions of dollars owed by millions of individuals, aiming to make loan repayment more manageable for borrowers.
