On November 26, the CFPB published a report that provided an analysis of the first seven months following the resumption of federal student loan repayments after the Covid-19 forbearance ended on September 1, 2023. The report detailed issues that borrowers experienced with servicers such as extended call waiting times, delays in processing income-driven repayment (IDR) plan applications, and inaccurate billing statements. The report also noted the Department of Education implemented a one-year “on-ramp” policy to mitigate the negative effects of missed payments on borrowers’ credit reports, which automatic placed borrowers in forbearance temporarily if they missed three consecutive monthly payments.

Using credit record data from the CFPB’s Consumer Credit Information Panel, the report examined the repayment statuses of student loan borrowers as of this past April and found that approximately 40 percent of borrowers successfully made payments, 20 percent owed nothing due to IDR plans, and 30 percent missed their April payments. The report highlighted the number of borrowers who owe no monthly payments has more than quadrupled since the start of the pandemic, likely due to the introduction of the new Saving on a Valuable Education (i.e., the SAVE plan) that provided $0 monthly payments for borrowers earning up to 225 percent of the federal poverty level.

The report also revealed that borrowers who missed payments often face broader financial distress, including higher rates of delinquency on other debts and high credit card utilization. Borrowers in low-income areas were more likely to struggle; individuals who missed payments were 27 percent more likely to live in high-poverty areas and 60 percent more likely to be delinquent on non-student loan debt. Additionally, borrowers with $0 scheduled payments were 33 percent more likely to live in high-poverty areas and 30 percent more likely to have delinquencies on other credit accounts.

The CFPB emphasized the importance of continued monitoring and support for borrowers, particularly those struggling to access IDR plans due to long servicer call waiting times and processing issues. The report concluded that expanded $0 payments under IDR plans may help some borrowers stay out of delinquency on their student loans and avoided increasing their use of other debts. The Bureau noted it will continue to monitor the return to student loan repayment activities through supervision and complaint handling.