Student loan delinquency rates have hit a record high at 12.9%, the highest in 21 years
Delinquencies on student loans are climbing sharply now that years of pandemic-era protections have expired.
In the second quarter of 2025, 10.2% of student debt was more than 90 days overdue, according to the Federal Reserve Bank of New York. Even more striking, 12.9% of loans entered serious delinquency, the highest rate since the Fed began tracking the data 21 years ago.
The increase partly reflects how missed payments were reported. “Federal student loan payments that went unreported to credit bureaus between Q2 2020 and Q4 2024 are now appearing in credit reports,” the New York Fed said. “Consequently, student loan delinquency rates continued to rise.”
From relief to repayment
Congress first suspended federal student loan payments in March 2020 as part of a COVID-19 relief package. The measure paused monthly bills, cut interest rates to 0%, and stopped missed payments from being reported. As a result, delinquency rates plunged to less than 1%.
The pause was extended multiple times until interest restarted in September 2023 and payments resumed the following month. To ease the transition, the government created a one-year “on-ramp” period where missed payments still didn’t affect borrowers’ credit. That grace period expired last fall, and delinquencies began showing up on credit reports in early 2025.
“This is when the trouble kind of began,” said Preston Cooper, senior fellow at the American Enterprise Institute. “People were told over and over that payments would resume, only for the pause to be extended. Now the pause actually ended, and many simply weren’t paying attention.”
Borrowers struggling to adjust
The years-long pause also caused logistical challenges: borrowers moved, changed loan servicers, or updated contact information, making communication harder.
As of March, only about 35% of borrowers were actively repaying their loans, Cooper said. “We’re not in a great situation right now. Delinquencies are very elevated, many people are still in forbearance, and repayment rates are well below where they were before the pandemic.”