An analysis of the first seven months of the federal student loan return to repayment

The COVID-19 emergency multi-year pause on federal student loan interest and payments ended September 1, 2023, and many borrowers faced challenges during the transition into repayment. In this report, we use credit record data to look at how student loan borrowers fared after returning to repayment. Key findings include:

• Around 40 percent of borrowers successfully made payments in April 2024.
• Approximately 20 percent of borrowers had a scheduled payment of $0 as of April 2024, about double the share of borrowers before the payment pause as the use and generosity of IDR plans increased.
• Approximately 30 percent of borrowers missed their payments in April 2024 which is similar to the share (27 percent) of borrowers in repayment who missed their most recent payment prior to the payment pause in our sample.
• Nearly 8.9 million borrowers appear to have benefitted at least once from the on-ramp policy as 28 million borrowers returned to repayment all at once.
• Almost half (47 percent) of student loan borrowers entering repayment for the first time are not actively repaying. Additionally, 21 percent of borrowers new to repayment successfully made their payments in April 2024, and another 21 percent had $0 scheduled payments.
• Delinquencies on non-student loan debts were higher at the end of the payment pause than before the pause. Borrowers with $0 scheduled payments or who missed their April 2024 payments were five times more likely to have a non-medical collection appear on their credit record during the payment pause than borrowers who made their student loan payments and about three times more likely to be using 90 percent or more of their total credit card limit.
• Borrowers who live in low-income areas remain more likely to struggle to repay their student loans and other types of credit. Borrowers who have missed student loan payments are 27 percent more likely to live in a high-poverty area, consistent with borrowers with missed payments struggling more broadly. These borrowers are also about 60 percent more likely to be delinquent on a non-student loan debt than student loan borrowers overall. Similarly, borrowers with $0 scheduled monthly payments (likely due to meeting required low-income thresholds under IDR plans) are 33 percent more likely to live in a high-poverty area and are about 30 percent more likely to have delinquencies on other types of credit accounts than borrowers overall.

Overall, this analysis indicates that many student loan borrowers are experiencing financial stress despite the increased availability of IDR plans. Increasing credit card utilization rates and delinquencies on non-student loan accounts in the months leading up to the repayment restart show that many student loan borrowers were struggling even before their student loan payments began in late 2023. Millions more borrowers could likely benefit from the reduced or $0 payments offered by IDR plans but may be experiencing problems in successfully accessing these plans due to long servicer call wait times and problems with IDR application processing or documentation, among other barriers. In particular, the similarities between borrowers who have $0 scheduled payments under IDR plans and borrowers who have missed payments suggests that expanded $0 payments may help some borrowers stay out of delinquency on their student loans or avoid increasing their use of other debts.

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