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Federal student loan borrowers are paying down their debt more slowly than before the COVID-19 payment pause, and delinquency rates have climbed back to pre-pandemic levels, signaling potential defaults ahead, according to a new Urban Institute analysis.
The report, released this month by researcher Jason Cohn, uses credit bureau data to track borrower progress in the two years since most federal student loan borrowers resumed payments in October 2023 after a three-year pause. The findings paint a troubling picture of borrower engagement with the federal student loan system as protections implemented during the pandemic have been phased out.
"These findings suggest default rates will spike over the next several months," Cohn wrote in the brief, which offers policy recommendations for protecting vulnerable borrowers and preventing future defaults.
The analysis found that 21 percent of student loan borrowers had at least one delinquency in the 24 months ending in August 2025, matching pre-pandemic levels from 2019. That figure had dropped to just 3 percent during the payment pause, when borrowers were protected from negative credit reporting through administrative forbearance.
Delinquency rates are likely to continue rising, Cohn warned, because the August 2025 measurement captures only 11 months of potential delinquencies for most borrowers since protections ended in October 2024. The "on-ramp" period, which shielded borrowers from most consequences of missed payments including delinquency reporting to credit bureaus and default, lasted one year after payments restarted.
"By August 2026, the share of borrowers with a recent delinquency could be greater than at any point since at least 2015," the report stated.
Student loans have once again become the payment borrowers are most likely to miss, surpassing auto loans, credit cards and mortgages, the data showed. This marks a return to the pattern that existed before the payment pause began, even as credit card delinquencies have increased in the post-pandemic period.
