1 in 5 students are behind on loan payments – Here’s how to catch up

As many as 20% of student borrowers who took out loans to fund their education are in arrears, according to the latest data from the Federal Reserve. Alarmingly, this rate has increased in recent years, despite the general strength of the US economy.

With that in mind, here’s a look at who’s past due on their student loans and what you can do if you’ve fallen behind.

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Who is behind on their payments?

According to the Federal Reserve’s 2018 report on the economic well-being of American households, 20% of student borrowers were in arrears in 2017, a percentage that rose from 18% in 2015.

A key point is that there is a fat difference between different graduation categories. Specifically, the further a borrower went in their education, the less likely they were to fall behind on their loan repayments:

Highest level of education attained

Delinquency rate

Less than an associate degree

More than 37%

Associate’s degree




Graduate Diploma


Data source: Federal Reserve (2018-2019).

There is also a big difference in delinquency rates based on loan balances, but it’s probably not what you think. It may seem counter-intuitive, but the most indebted borrowers are the less likely to be in arrears: 18% of borrowers with less than $10,000 in student debt are in arrears, compared to 22% of borrowers with debt between $10,000 and $25,000 and only 16% of borrowers with a debt of $100,000 or more.

Although this may seem odd, think about it in the context of education levels. Borrowers with large student loan balances are more likely to have obtained higher degrees (and high-paying jobs), while borrowers with relatively low balances are more likely to have left school before completed their studies.

What to do if you need to catch up

If you’re behind on your student loan payments and want to catch up, there are a few things you can do. And you might be surprised how easy and inexpensive it is to move your account from delinquent status to current status, especially if you have federal student loans.

The first step is to call your loan manager to discuss your options. Even if you have private student loans, your lender may have some kind of forbearance program designed to help borrowers in times of financial difficulty.

If you have federal student loans, you may qualify for a deferral or forbearance. You can defer your federal student loan for up to three years. Deferments are fairly easy to obtain if you are unemployed, cannot find full-time work, or are in general financial difficulty.

If you have already exhausted your three years of eligibility for deferment, you may be able to obtain an abstention instead. The difference between deferment and forbearance—and the reason deferment is better—is that if you defer a subsidized federal student loan, you also defer interest. If a loan is suspended, you won’t have to make monthly payments, but interest will continue to accrue.

As long as you’re just behind on your student loan payments but not already in default on your student loans (which usually means you’re nine or more months behind), one of them should be an option. Both allow you to temporarily suspend your monthly loan payments and thus bring your loan to a much better than “delinquent” status.

Once you’ve limited the damage, it might be a good idea to look into an income-driven repayment plan for your federal student loans. These cap your student loan repayments at a certain percentage (10% or 15%) of your discretionary income. If you don’t have Discretionary Income, your payout may even be $0. If you’re having financial difficulty, that means your loan could eventually be “paid as agreed”, even if you don’t pay anything at all.

The worst thing you can do if you’re behind on your student loan payments

There is certainly a huge burden of student loan debt in the United States, but one good thing about this type of debt is that lenders (both private and federal) tend to be much more willing to work with borrowers in hard times than they do with other types of debt. Delinquencies on student loans hurt your credit and can therefore make it more expensive and difficult to get a mortgage or car loan.

In short, the worst thing you can do if you’ve fallen behind on your student loan payments is to ignore the problem. As we have seen, you may be able to pause your payments or get a significantly reduced monthly obligation with minimal effort. So there’s no good reason not to call your repairman and see what can be done.

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