More Than 9 Million U.S. Borrowers Miss Student Loan Payments as Delinquencies Surge

Over 9 million U.S. student loan borrowers have missed payments as the share of delinquent balances doubles following the expiration of Biden-era forbearance programs, according to the latest data from the Federal Reserve and consumer credit reporting agencies. The surge in delinquencies underscores both the financial strain on households carrying educational debt and the broader challenges facing policymakers as they navigate the post-pandemic student loan landscape. 

Delinquencies Spike Following Forbearance Expiration

During the COVID-19 pandemic, federal student loan programs were placed on temporary forbearance, suspending repayments and pausing interest accrual. This relief was widely credited with providing financial stability to millions of borrowers. However, since the expiration of the forbearance program in early 2025, repayment obligations have resumed, and delinquencies have accelerated.

Data from the Federal Reserve Bank shows that the share of outstanding student loan balances past due has roughly doubled, with particular pressure observed among lower-income borrowers and recent graduates entering a challenging labor market.

Impact on Borrowers and Household Finances

Experts note that the resumption of payments is creating immediate stress for households. Many borrowers are adjusting monthly budgets to accommodate repayments that can range from hundreds to over a thousand dollars per month, often coinciding with other financial obligations such as rent, childcare, and credit card debt.

“Borrowers who were able to defer payments for years are now facing the reality of repayment,” said Mark Kantrowitz, an education finance expert. “This is particularly challenging for those in lower-paying jobs or industries impacted by economic uncertainty.”

Trends by Borrower Demographics

The rise in delinquencies is not evenly distributed. Analysts report that:

• Recent graduates struggling with entry-level wages are disproportionately affected.
• Borrowers with income-driven repayment plans are seeking adjustments or temporary forbearances.
• Higher-balance borrowers face compounded interest charges, increasing the likelihood of prolonged repayment difficulties.

The cumulative effect is that more than 10% of the total outstanding student loan balance is now delinquent, signaling a significant risk to both household finances and broader consumer spending.

Economic Implications

Rising student loan delinquencies have macro-level consequences. Economists highlight several risks:

1. Consumer Spending: Borrowers allocating funds to loan repayments may reduce discretionary spending, impacting retail, dining, and travel sectors.
2. Credit Access: Delinquent borrowers may face higher borrowing costs or reduced access to credit, affecting mortgages, auto loans, and small business financing.
3. Financial Stability: High delinquencies could influence broader credit markets, with investors factoring in increased default risk in securitized student loan portfolios.

Dr. Diane Swonk, Chief Economist at KPMG US, emphasized:

“The doubling of delinquent student loan balances reflects a combination of lingering economic pressures and policy transitions. Policymakers and lenders will need to carefully monitor the repayment landscape to mitigate both household hardship and systemic financial risks.” 

Policy and Relief Options

The Biden administration implemented several measures aimed at easing repayment burdens, including targeted forgiveness, extended income-driven repayment plans, and refinancing initiatives. However, many borrowers remain unaware of available options or find eligibility criteria restrictive.

Consumer advocates are calling for expanded outreach and simplified enrollment in relief programs to prevent defaults, which can have long-term consequences for credit scores and financial mobility.

Outlook for Borrowers and Lenders

Industry observers expect the delinquency rate to remain elevated for the next several quarters, particularly if economic conditions stagnate or inflationary pressures persist. Lenders and servicers are likely to implement proactive measures, including enhanced borrower support, automatic income-driven repayment enrollment, and targeted counseling.

At the same time, investors in student loan-backed securities are closely monitoring trends, as prolonged delinquencies could influence returns and secondary-market valuations.

Conclusion

The surge in U.S. student loan delinquencies highlights the ongoing financial challenges for millions of borrowers following the expiration of pandemic-era relief. While some households have managed to resume payments successfully, the broader picture reflects economic stress, uneven recovery, and the critical need for policy interventions and borrower education. As repayment obligations continue to climb, both borrowers and the broader economy will feel the effects of this shifting debt landscape.