Student Loan Delinquency Surges After Pandemic Forbearance Ends

Federal student loan delinquencies have climbed sharply since the pandemic payment pause ended, and the first wave is landing on campus. The Federal Reserve Bank of New York reported that 15.6 percent of outstanding student loan balances were 90 or more days past due or in default at the end of 2024. The federal portfolio is roughly $1.6 trillion, owed by more than 40 million borrowers.

Payments paused in March 2020 under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. Interest resumed on September 1, 2023, and the first bills came due in October 2023. For a year after that, a Department of Education payment on-ramp kept missed payments from being reported to credit bureaus or referred for collection.

That on-ramp closed on September 30, 2024. Delinquencies are now showing up in credit files and collection queues, then in the federal student aid eligibility checks colleges run before they release money.

Who is affected now

The immediate pressure falls on borrowers who left the pause without a working income-driven repayment plan. Campus financial aid offices meet these borrowers when a past-due loan blocks a Pell Grant or a new Direct Loan. Borrowers who did not enroll in the Fresh Start program before it also ended on September 30, 2024 are back in collection status and face wage garnishment and tax refund offsets, plus collection costs.

Community colleges and regional public universities are seeing the earliest warning signs because their students are more likely to stop out for financial reasons and return with a past-due federal account. The aid office often learns about the default only after the student applies for readmission.

Loan servicers are working through the first full year of missed-payment reporting since 2020. At the same time, roughly 8 million borrowers enrolled in the Saving on a Valuable Education plan are sitting in a separate administrative forbearance created by litigation over that plan.

Universities will feel the full default effect late. The cohort default rate used to evaluate institutions takes three years to publish, so the post-pause surge will not be visible in official rates until the late 2020s.

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SAVE litigation splits borrowers into two tracks

About 8 million borrowers enrolled in the SAVE plan were placed into interest-free forbearance after a federal appeals court blocked parts of the plan in 2024. Those accounts are not required to make monthly payments, so they are not driving the delinquency increase.

Borrowers outside that group are. The Federal Reserve Bank of New York's household debt report records the movement of balances into serious delinquency. The legal fight has also disrupted income-driven repayment application processing, making it harder for some borrowers to secure a plan they can afford.

AcademicJobs has followed the federal student aid and loan servicing changes that added friction to the repayment restart.

What default means for students and campuses

A federal loan is reported delinquent at 90 days. At 270 days without an approved arrangement, it enters default, according to Federal Student Aid. In default, a borrower loses eligibility for new federal student aid, so a returning student cannot receive a Pell Grant or a new Direct Loan until the default is resolved.

For institutions, the risk is enrollment and revenue. A school with a three-year cohort default rate of 30 percent or more can lose Pell Grant and Direct Loan eligibility; a rate above 40 percent in a single year triggers provisional certification. Those rules sat largely dormant while default rates fell for years before the pandemic.

Defaults often happen within the first two years after a borrower leaves school, which is why stop-out and readmission patterns matter. The post-forbearance wave may test those thresholds again at institutions enrolling large shares of low-income students and working adults.

Photo by Vitaly Gariev on Unsplash

What university aid offices are doing now

Financial aid staff have restarted default-management outreach that went quiet during the payment pause. At some campuses, that means pulling weekly reports of enrolled students with federal loans past due and calling before disbursement holds are applied. Staff also point students to the Department of Education's repayment tools.

Colleges with emergency aid funds are using small grants to clear past-due balances that would otherwise stop re-enrollment. Others are directing borrowers to loan rehabilitation or consolidation, the two standard ways to get a defaulted federal loan back into good standing.

Some institutions have added student-facing repayment modules to orientation and financial literacy sessions. The goal is not advice about a specific plan; it is to keep the borrower in contact with the servicer before the account reaches 270 days.

• Check the account on the Federal Student Aid site before classes start.
• Apply for an income-driven repayment plan if standard payment is too high.
• Ask the servicer about loan rehabilitation or consolidation if the loan has already defaulted.
• Keep contact information current with both the servicer and the university.
• Read financial aid award letters for the phrase default clearance to spot a hold early.

Borrowers who hit servicer delays can submit a complaint through the Consumer Financial Protection Bureau's student loan portal.

What to watch in 2025 and 2026

The delinquency share is likely to climb further in 2025 as borrowers who missed payments during the on-ramp pass 90 days and, eventually, 270 days in collections. Official cohort default data for the restart cohort will not arrive until later this decade, but administrators will see warnings sooner through institutional aid checks.

The SAVE injunction is the wildcard. If the legal fight or a new regulation reopens income-driven repayment pathways, some borrowers currently headed toward default may switch plans or receive retroactive forbearance. If it does not, the delinquency surge will broaden as the separate SAVE forbearance eventually ends.

For campus leaders, the useful metric is not the national delinquency rate. It is the number of enrolled students with a federal loan already past due before the next disbursement run.