After student loan delinquency rates fell to historic lows during the pandemic-era payment pause, they have now returned to roughly prepandemic levels.
In August 2019, about 16.7 percent of student loan holders, including those in repayment and in deferment, were at least 60 days delinquent or in default. By August 2022, student loan delinquencies hit a low of 2.3 percent. Three years later, that share had climbed back to 15.9 percent.
This sharp rebound happened in concert with three policy changes: the end of the federal payment pause at the start of October 2023, the yearlong on-ramp for student loan repayment preventing delinquency reporting until October 2024, and the continued administrative forbearance for some borrowers on the new income-driven repayment plan.
However, though the overall share of borrowers falling behind looks similar to the prepandemic period, the financial profile of delinquent borrowers has changed dramatically. Today’s student loan borrowers are carrying more types of debt and are more likely to face broader financial distress. In this article, we outline how the profile of student loan borrowers has changed and what that means for future policy.
Delinquent borrowers today are carrying more debt
Our analysis of the Urban Institute’s credit bureau panel shows that, compared with 2019, delinquent student loan borrowers in 2025 are substantially more likely to hold other major forms of household debt. Among delinquent borrowers, 38 percent now have an auto loan, up from 30 percent before the pandemic. The share with a mortgage has nearly doubled, rising from 8 percent in 2019 to 15 percent in 2025.
These changes may reflect the broader expansion of household credit during the pandemic and its aftermath. Historically low interest rates, expanded income supports (PDF), and widespread forbearance across credit markets made it easier for households to take on new obligations. At the same time, the federal student loan payment pause removed a major source of delinquency from borrowers’ credit reports, temporarily improving credit scores for many households and increasing their access to credit. As a result, some borrowers qualified for new loans—including auto loans and mortgages—that would have been harder to obtain under normal repayment conditions.
In addition, some borrowers may have restructured their finances during the pause, with the assumption that student loan payments would remain low, delayed, or potentially eliminated.
Expectations about forgiveness shaped financial decisions
During the payment pause, borrowers repeatedly heard public signals suggesting student loan balances might be permanently reduced or eliminated.
In August 2022, the Biden administration announced a plan to cancel up to $10,000 of student debt—or up to $20,000 for Pell grant recipients—for tens of millions of borrowers. Subsequent policy actions and rulemaking further expanded or proposed to expand loan forgiveness. Against that backdrop, some households may have felt reasonably equipped to take on auto loans, enter the housing market, or expand their use of other credit products.
Now that payments have resumed for many, those same borrowers may face much tighter budgets—needing to accommodate student loan bills alongside mortgages, car payments, and higher-cost revolving debt. For borrowers already on the financial edge, the return of student loan payments may be less of a standalone shock than the final strain on an already-stretched balance sheet.
Early signs point to broader financial distress
Our analysis suggests that student loan delinquency is increasingly intertwined with distress across other credit markets. Among delinquent student loan borrowers in 2025, 13 percent were also delinquent on their credit cards, up from 8 percent in 2019. The share delinquent on auto or retail loans rose even more sharply, from 3 percent before the pandemic to 8 percent in 2025.
Additionally, millions of borrowers currently in forbearance on a Biden-era income-based repayment plan will soon need to move to new repayment plans and resume payments. Our analysis shows that 45 percent of student loan borrowers were in forbearance or deferment as of August 2025, up from 31 percent in August 2019. About 7 million borrowers were in administrative forbearance because they had enrolled in the enjoined Saving on a Valuable Education repayment plan.
Given the rising financial vulnerability of borrowers who have already fallen behind, this transition to a new repayment plan could create additional challenges and increase financial strain for some households.
Why this shift matters for policy
Today’s delinquent student loan borrowers are more deeply embedded in the credit system than they were before the pandemic, which means the consequences of student loan distress may quickly lead to broader financial hardship. To support struggling borrowers, policymakers could:
- prioritize improvements in loan servicing
- strengthen outreach and assistance to help borrowers enroll in and recertify for income-driven repayment plans
- consider reforms to default policies that make it easier for borrowers to return to repayment rather than remain trapped in long-term delinquency
With many people already feeling the pinch of rising costs for everyday goods, providing options for delinquent borrowers may be necessary to ensure rising delinquency rates do not contribute to greater economic distress.
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