30 Percent of Federal Student Loan Borrowers Were Behind on Payments in January: Report

U.S. Department of Education building in Washington on July 6, 2023. (Madalina Vasiliu/The Epoch Times)

Nearly 30 percent of federal student loan borrowers were behind on their payments in January of this year, a few months after they started getting bills again, the U.S. Government Accountability Office found in a new report.

The report, released to the public on Aug. 14, was produced at the request of congressional Republicans to review the state of student loan repayment after more than three years of forbearance that began during the COVID-19 pandemic.

As of Jan. 31, approximately 13.3 million borrowers, representing 40 percent of all borrowers nationwide, were current on their loans and making payments, according to the report.

In addition, about 4.5 million borrowers (14 percent) were current and were not required to pay any monthly payment as part of income-driven repayment (IDR) plans, which adjust the monthly bills based on the borrower’s income and family size and offer forgiveness for any remaining balance at the end of the repayment period. Monthly bills on IDR plans can be as low as zero dollars and still count toward eventual debt cancellation.

Another 10 million borrowers (29 percent) were considered past due on their loan payments, the GAO said. The past-due accounts totaled $290 billion in outstanding loans.

About 6 million of those behind on payments have been shielded from negative credit reporting as part of a 12-month “on-ramp” period the Biden administration established to ease borrowers back into making payments. The on-ramp is set to expire on Sept. 30.

The remaining 17 percent of borrowers—accounting for about $254 billion in loans—were not expected to make payments because their loans were either in deferment or forbearance.

Lawmakers Respond

Sen. Bill Cassidy (R-La.), the top Republican on the Senate Committee on Health, Education, Labor, and Pensions, requested the study along with Rep. Virginia Foxx (R-N.C.), who chairs the House Committee on Education and the Workforce. Both criticized the Biden administration for enacting a large-scale student loan debt cancellation that may not withstand legal challenges instead of making sure borrowers repay their loans.

“These borrowers are racking up interest with missed payments while waiting for the false promise of widespread debt ‘cancellation’ this administration has no legal authority to deliver,” Cassidy said in an Aug. 14 statement following the report.

“The majority of borrowers don’t believe they need to pay back the loans they knowingly took on, and who can blame them after years of false hope and illegal schemes from the Biden-Harris administration?” Foxx said in the statement.

The U.S. Department of Education, meanwhile, noted that more borrowers are making monthly payments on their loans than before the repayment pause began in March 2020.

“Many borrowers still face challenges in repaying their loans, which is why the Biden-Harris Administration has fought at every turn to address the student debt crisis, forgive loans for nearly 5 million borrowers, and cut monthly payments for millions more,” a spokesperson for the department said in a statement to The Epoch Times.

The report comes as the Biden administration works to create a framework for a new student loan cancellation program through a formal rulemaking process.

In an Aug. 1 email sent to millions of borrowers, the Education Department said it is still working to finalize the new regulations that would make more than 30 million borrowers eligible for debt relief.

Those who want to be included in the debt relief don’t have to do anything, the department said in the email. Those who want to opt out have until Aug. 30 to notify their student loan servicer.