40 percent of student loan borrowers missed payments in October

About 40 percent of the federal student loan borrowers who owed payments in October when the pandemic-era moratorium expired failed to make those payments by mid-November, the Biden administration said on Friday.

The new data shows, for the first time, that millions of borrowers are availing themselves of the flexibility that the Biden administration has offered borrowers as payments resumed this fall for the first time since the pandemic began in March 2020.

As part of that flexibility, which the administration calls the “on-ramp” to repayment, the Education Department will not report borrowers as delinquent to credit bureaus through the end of next September, though interest will continue to accrue on their debt.

Still, the Education Department data also shows that the delinquency rate on federal student loans is significantly higher than it was before the pandemic.

In the months before the pandemic, about 16 percent of federal direct loan borrowers were more than a month behind on their payments; about 84 percent of the borrowers were current on their debt at the end of 2019, according to Education Department data.

The Education Department emphasized that a majority of borrowers successfully paid their first monthly payment. About 60 percent of the 22 million borrowers who owed a payment in October made the payment by the middle of last month, according to the department.

“While most borrowers have already made their first payment, others will need more time,” James Kvaal, the undersecretary of education, said in a blog post explaining the new data on Friday. “Some are confused or overwhelmed about their options. We want to make sure borrowers know that our top priority is to support student loan borrowers as they return to repayment.”

The latest figures do not include borrowers who did not owe a payment in October because they were still in school, in a grace period or had another type of deferment or forbearance.

It also excluded the several million borrowers who were retroactively granted a forbearance because of billing mistakes or other loan servicing errors that the Education Department previously disclosed.