Student loans crisis looms as Biden-era payment pause nears end, UC report warns
A new analysis from the University of California’s nonpartisan California Policy Lab shows the majority of student loans in the U.S. are not actively being repaid, and one in four loans that are being paid are in delinquency.
Of the outstanding loans, only 33% are actively being repaid, and the rest are in default, on pause, or deferred for school or low-income reasons.
The analysis comes on the heels of a settlement reached on Tuesday between the federal government and Missouri, which would end the Biden-era Saving on a Valuable Education plan program. President Donald Trump’s Department of Education agreed with the states that the program was illegal and unfair to taxpayers, with Under Secretary of Education Nicholas Kent calling it a “deceptive scheme.” If a court approves the settlement, about 7.7 million borrowers on the SAVE plan will have to find new, likely less-generous, repayment programs.
“Economically right now, people are stretched pretty thin,” said Evan White, executive director of the California Policy Lab’s UC Berkeley site and an author of the report. White pointed to economic indicators showing financial distress is in its worst spot since the Great Recession.
“If Tuesday’s settlement is approved by the court, our analysis suggests that millions more borrowers will soon be behind on payments, which has cascading effects for their financial lives and their families.”
Part of the reason the payments haven’t been happening is because people on the SAVE program have been in “administrative forbearance,” meaning they haven’t been required to make payments while court cases are pending.
The forbearance came on the heels of a payment pause initiated during the pandemic, which lasted until 2023, and was followed by an “on-ramp” period when loan servicers couldn’t report late payments to credit bureaus.
“I think there’s partly probably some confusion because there’s been so many changes,” White said.
Long repayment plans have cascading effects
The Policy Lab’s analysis shows the share of borrowers that have been repaying their loans for more than 10 years has gone from 22% in 2015 to 40% in 2025.
The report’s authors attribute this rise, in part, to an increase in income-driven repayment plans that last for 20 to 25 years. Those long plans can have downstream impacts.
“Those with student debt postpone home buying because saving for a down payment usually comes after paying down existing debts,” the analysis reads.
“Though there is less direct evidence, longer repayment terms are also likely to postpone savings, other wealth accumulation, and family and small business formation, which often require capital investments.”
Although it’s unclear what timeline SAVE borrowers will have to find new plans, the Trump administration will launch a Repayment Assistance Plan in July 2026, with a payback period of 30 years.
