Nearly 20 million people who owe student loans not making payments as government tries to claw back $1.6tn

Nearly 20 million people who owe student loans are not making payments, according to the latest Department of Education data.

Following a three-year timeout on payments that began in 2020 during the pandemic, the government has restarted collecting the $1.6 trillion it is owed.

At the end of March, six months after the hiatus ended, nearly 20 million borrowers were making payments as scheduled. However, almost 19 million were not, leaving their accounts delinquent, in default, or still on pause.

Seven million people were at least 30 days overdue on payments at the end of 2023 — marking the highest delinquency rate since 2016.

Millions more had their accounts frozen through deferment or forbearance — meaning they did not have to pay their loans or they did not acquire interest — while nearly six million student loans were still in default from before the pandemic. For most federal student loans, you default if you have not made a payment in more than 270 days.

“The nonpayment rate really is emblematic of a system that’s not doing its job,” Persis Yu, managing counsel for the Student Borrower Protection Center, told the New York Times.

Throughout his presidency, Biden has sought to eliminate student debt, putting forward a major proposal to cancel as much as $400bn in loans. That proposal was struck down by the Supreme Court, which ruled that the move was unconstitutional.

President Biden also created the SAVE plan last year, which includes the cancellation of up to $10,000 in federal student loan debt for borrowers earning less than $125,000 annually.

The plan includes reforms to income-driven repayment plans, reducing the percentage of discretionary income that borrowers must pay each month from 10 percent to 5 percent.