SACRAMENTO, the United States, Dec. 12 (Xinhua) -- Millions of U.S. student loan borrowers are struggling to repay their student loans as delinquency rates reach historic highs, according to new research from U.S. institutions, with conditions expected to worsen following recent policy changes.
The California Policy Lab (CPL), a nonpartisan research institute at the University of California, Berkeley, released an analysis on Wednesday warning that "student loan distress is about to go from bad to worse."
In the United States, many students borrow money from the federal government to pay for their university education. The total outstanding federal student loan debt now exceeds 1.6 trillion U.S. dollars, affecting more than 40 million borrowers.
According to the CPL report, only 33 percent of all outstanding student loans are being actively repaid on time. This represents the lowest on-time repayment rate in approximately two decades.
The Federal Reserve Bank of New York reported that 9.4 percent of student loan debt was 90 or more days past due in the third quarter of 2025. Credit reporting agency TransUnion found that by April 2025, approximately 31 percent of federal student loan borrowers with a payment due were severely delinquent. TransUnion called this the highest rate it has ever recorded.
The crisis followed the end of a pandemic-era pause on student loan payments. The U.S. government suspended required payments in March 2020 due to the COVID-19 emergency. Payments resumed in October 2023, but a temporary protection period prevented missed payments from being reported to credit agencies until late 2024.
Recent policy changes are adding pressure. The U.S. Department of Education on Tuesday announced a settlement that will terminate the Saving on a Valuable Education (SAVE) plan. This move affected approximately 7.7 million borrowers who would be required to restart payments after years of pause.
Additionally, legislation signed in July 2025 called the One Big Beautiful Bill Act eliminated most existing income-driven repayment plans for future loans and created a new Repayment Assistance Plan with longer repayment periods of 30 years.
Borrowers who fall behind on payments face significant consequences. TransUnion data showed that delinquent borrowers experienced average credit score drops of 60 points, with some losing up to 175 points. Poor credit scores can prevent Americans from renting housing, obtaining car loans, or accessing other forms of credit.
The CPL projected that nearly 2 million additional borrowers may become delinquent once the SAVE plan terminates, based on historical repayment patterns. ■