By Aliss Higham
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
More than a quarter of student loan borrowers in several states are behind on their payments, according to a new report.
Why It Matters
Being in default leaves borrowers vulnerable to consequences such as wage garnishment and the seizure of tax refunds, although some federal collection measures remain on hold. The U.S. has some 42 million people with student loans.
Read More on News
What To Know
Researchers at The Century Foundation and Protect Borrowers said missed payments have surged to nearly three times their pre-coronavirus pandemic level, pushing millions of borrowers nationwide toward default and dragging down credit scores. They warned the ripple effects could extend beyond individual households, increasing financial strain on families and raising nonpayment risks for colleges and universities.
After Joe Biden administration pandemic protections expired and policy changes took effect in 2025 under the current administration of President Donald Trump, the share of borrowers with payments due who fell behind climbed to about 25 percent—almost triple the 2019 rate of 9.2 percent.
Researchers found that 7.9 million borrowers entered delinquency during the first three quarters of 2025, with 6.3 million still behind by the end of September. Those delinquent borrowers carried an average balance of roughly $34,000.
Student Loan Delinquencies by State
Under loans issued by the U.S. Department of Education, borrowers are typically considered in default after 270 days, or about nine months, without payment. The report found that student loan delinquency rates vary sharply across the country, with several states in the South and Southwest reporting the highest shares of borrowers behind on their payments.
New Mexico tops the list at 29.63 percent, followed by Oklahoma at 28.23 percent and West Virginia at 27.78 percent. Mississippi is not far behind at 26.54 percent, while Kentucky (25.29 percent), Arizona (25.19 percent) and Nevada (25.09 percent) also report delinquency rates above 25 percent. Many of the highest rates concentrated in states that have historically lower incomes and higher poverty levels.
At the other end of the spectrum, several Northeastern and Midwestern states report significantly lower delinquency rates.
Massachusetts has the lowest rate at 13.83 percent, followed by New Hampshire at 14.11 percent and Utah at 14.3 percent. Connecticut (15.2 percent), New Jersey (15.32 percent), Vermont (15.47 percent), Nebraska (15.63 percent) and Minnesota (15.89 percent) round out the group of states with the lowest shares of borrowers in delinquency, showing a gap of more than 15 percentage points between the best- and worst-performing states.
Upcoming Student Loan Changes
The federal student loan system is set to undergo a major overhaul beginning July 1, 2026, replacing several existing income-driven repayment plans with a new structure centered on the Repayment Assistance Plan (RAP). Plans such as SAVE, PAYE and Income-Contingent Repayment will be phased out for new borrowers, and many existing ones will eventually need to transition to the new system by July 1, 2028.
Going forward, most new federal loan borrowers will have just two primary options: a standard fixed repayment plan or RAP.
RAP is a new income-based repayment plan that calculates monthly payments based on a borrower’s adjusted gross income rather than discretionary income. It includes a $10 minimum monthly payment, reduces required payments for borrowers with dependents, and waives unpaid interest to prevent balances from growing due to interest accrual.
In some cases, the government may also apply additional principal reductions. Any remaining balance would be forgiven after 30 years of qualifying payments. Existing borrowers can generally choose to remain in their current plans for a limited time or opt into RAP before the 2028 deadline.
In a polarized era, the center is dismissed as bland. At Newsweek, ours is different: The Courageous Center—it's not "both sides," it's sharp, challenging and alive with ideas. We follow facts, not factions. If that sounds like the kind of journalism you want to see thrive, we need you.
When you become a Newsweek Member, you support a mission to keep the center strong and vibrant. Members enjoy: Ad-free browsing, exclusive content and editor conversations. Help keep the center courageous. Join today.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines