Key Points
- Two in three student loans are not being actively repaid, and a quarter of loans requiring a payment are already delinquent.
- A proposed settlement could force 7.7 million borrowers to restart payments after five years, potentially adding nearly 2 million new delinquent borrowers.
- Long-term repayment is becoming more common, with the share of borrowers repaying for more than a decade nearly doubling since 2015.
The vast majority of student loans in the United States remain effectively paused, and delinquency rates are climbing 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, offers one of the clearest pictures yet of a repayment system strained by policy whiplash, legal uncertainty, and the lingering effects of the pandemic-era payment pause.
CPL finds that only 33% of outstanding student loans are being repaid on time, the lowest on-time repayment rate in two decades outside of the formal pandemic pause. The rest are in deferment, forbearance, delinquency, or an income-driven repayment plan requiring no payment.
The share of loans in deferment or forbearance alone has more than doubled since mid-2023 and now accounts for 49% of all loans.
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Payment Pause That Created Chaos
The rising nonpayment rates reflect the unusual circumstances of the last five years. Federal student loan repayment was paused from 2020 through August 2023, followed by a year-long “on-ramp” during which late payments were not reported to credit bureaus. Once that grace period ended in late 2024, delinquency surged.
By mid-2025, one in seven borrowers was at least 30 days late, the highest delinquency rate ever recorded in the data CPL tracks. Although delinquency ticked down slightly in the third quarter, the shift came largely because many borrowers moved into deferment or forbearance rather than resuming payments. Half of those exiting delinquency did not return to on-time repayment.
The recent spike in administrative forbearances is closely tied to ongoing court challenges to the Biden administration’s former SAVE repayment plan. Those legal disputes have effectively pushed millions of accounts into temporary nonpayment status until the courts reach a final decision. As CPL notes, that means many borrowers still have not faced a true repayment requirement—yet.
End Of SAVE Will Restart Payments For Over 7 Million Borrowers
A proposed settlement announced this week by the U.S. Department of Education could dramatically alter the trajectory of the repayment system. Under the terms of the settlement, 7.7 million borrowers enrolled in SAVE who have not made payments since 2020 would be required to resume payment obligations.
If these borrowers become delinquent at the same rate as current payers, nearly 2 million additional borrowers could quickly fall behind, CPL estimates.
That shift would come at a time when many households are already contending with higher living costs, rising credit card balances, and tighter budgets. CPL warns that the financial strain could ripple outward, affecting families’ ability to save, pay rent, or maintain good standing on other debts.
Longer Repayment Is Becoming The Norm
Beyond the immediate delinquency concerns, CPL’s analysis highlights a broader trend: borrowers are repaying loans over much longer periods of time.
The average age of a borrower’s oldest open student loan has climbed 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 has doubled over the same period, rising from 22% to 40%. Repayment stretches of more than 20 years, once 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), would extend repayment terms to 30 years for many borrowers.
Longer timelines may ease short-term budget pressure but can delay milestones such as homebuying, saving, and family formation, CPL notes.
What This Means For Borrowers
The combination of high nonpayment rates, looming restarts, and stretched repayment timelines suggests a volatile year ahead for borrowers.
Many households may experience financial pressure not only from resumed student loan bills but also from rising costs generally - including housing, transportation, and food. Those who entered administrative forbearance because of legal disputes may not be prepared to resume payments.
Borrowers struggling to restart repayment may need to explore income-driven options, though those programs themselves are in transition. While they may not be ideal, they're significantly better than defaulting on your student loans.
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Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.