The Government Accounting Organization (GAO) recently released a study* on borrower repayment practices after the payment pause as a result of the pandemic. This study looked at repayment status after 4 months of the payments resuming and discovered some interesting results.
As of the end of January 2024, a little more than half of borrowers (17.8 million) were current, meaning that they resumed their payments. But, of course, this means that a little less than 50% (15.5 million) are not current. 2.5 million are in forbearance, 3.3 million are in deferment and almost 10 million student loan borrowers are past due in their payments.
This confirms what we've observed since the start of repayments. The 12-month on-ramp period, during which missed payments weren't reported to credit bureaus, seems to have led many people to continue skipping payments because they didn't see any immediate negative consequences. However, that all changed on October 1st.
Beginning in October, missed or late payments will be reported to credit bureaus, which may result in negative credit impacts. For nearly 10 million student loan borrowers, this could come as an unexpected change. However, there are options available. A significant portion of borrowers—approximately two-thirds—have not yet utilized income-driven repayment (IDR) plans, which adjust payments based on an individual's income. These federal programs are designed to ensure that payments remain manageable.
Currently, about 4.5 million borrowers have $0 monthly payments under such plans. While a $0 payment is not guaranteed for all, IDR plans structure payments according to your income after essential expenses, helping you secure an affordable repayment option. Enrolling in a plan can allow you to remain current on your loans and avoid the credit risks associated with non-payment.
Remember, with Student Debt Solutions, it is free to find out if you can find a lower repayment plan. There’s no reason to wait – Log in to see your options.
*The full GAO report can be viewed here.