Staff Reports
The impending return of student loan repayments, initially scheduled for October 2024, is shaping up to be yet another leftist disaster on the horizon. The Department of Education may be mum on the details, but Nelnet—America’s largest federal student loan servicer—was kind enough to share some alarming insights with the American Enterprise Institute’s Preston Cooper. It appears that the end of student loan forbearance may just be the beginning of a financial apocalypse for millions of borrowers.
Before the pandemic turned student loan repayment into a game of hide-and-seek, approximately 60% of borrowers were successfully making payments. Fast forward to early 2025, and that number has crumbled down to a measly 38%. This shameful statistic suggests that borrowers aren’t just procrastinating; they are evidently in full rebellion mode, having spent months ignoring the critical issue of repaying their debts. For the past five months, repayment rates have stubbornly refused to rise above 40%, showing that many individuals have opted for the “out of sight, out of mind” approach.
But the refusal to pay isn’t just a solo act. A staggering 41% of borrowers are currently clinging to Deferment Island or basking in the sun on Forbearance Beach, with many participating in President Biden’s rather dubious “Saving on a Valuable Education” plan. While this plan is headed for a courtroom showdown — likely to be struck down by even the most lenient judges — it currently allows borrowers to dodge their loan obligations. However, when the gavel finally drops, the reckoning will come, and they’ll be forced back into the world of repayment.
Less Than 40% of Student Loans Are Currently Being Repaid https://t.co/j21kldIVbD
— Skuter (@SkuterCole) March 30, 2025
To make matters worse, a troubling 14.4% of borrowers are 91 days behind, and 5.6% are delinquent by 90 days or fewer. This barrage of missed payments will not only haunt borrowers—these delinquencies wreak havoc on credit scores like a bull in a china shop. The reasons for this reluctance to pay are as colorful as they are diverse, including borrowers losing touch with their loan servicers while willingly disengaging from the repayment system. Unsurprisingly, this ignorance will do little to salvage their slipping credit scores.
A report by the New York Fed reveals an eye-opening statistic: around 63% of student loan borrowers haven’t even bothered to reduce their balances since payments resumed in 2023. This raises a serious concern about what type of economic aftermath we might expect; 9 million student loan borrowers are expected to see their credit scores nose-dive in the first half of this year. After enjoying a prolonged financial vacation during the pandemic, these borrowers are now faced with a rude awakening. The consequences of missed payments could be extensive, especially if both prime and subprime borrowers join in on the payment boycott, leading to a cataclysmic drop in credit scores that might leave many unable to borrow or spend.
The reality is painfully clear: the current administration’s attempts to juggle student debt, economic recovery, and responsible financial behavior are producing a messy circus of delinquency and despair. Whether the push for repayment can rally borrowers back from their current state of financial stupor remains to be seen, but one thing is certain—this financial free-for-all is not going to end well.
