US student-loan delinquency hits 1 in 4 borrowers

One in four Americans with student loans is now delinquent, according to an analysis cited by CBS News, a sharp reversal after the pandemic-era payment pause masked nonpayment. The report—by the Century Foundation and Protect Borrowers using the University of California Consumer Credit Panel—estimates delinquency has risen to roughly 25% as regular billing and collections resume.

The number matters less for what it says about the design of the system than for the immediate consequences it triggers. Federal student loans are issued at scale, on standardized terms, to borrowers whose future income is uncertain and whose education quality is difficult to price in advance. Universities are paid upfront; the borrower carries the debt; and the taxpayer ultimately absorbs losses through write-offs, income-driven repayment subsidies, and political pressure for broad relief. When payments are paused for years, delinquency does not disappear—it waits.

The same structure also changes behavior on the way in. Easy credit lets institutions raise tuition without having to prove value to a paying customer, because the buyer is financed by the state. Borrowers, meanwhile, can treat repayments as optional in expectation of the next suspension, a new forgiveness program, or a redefinition of “affordable” payments. The result is a market where the price signal is dulled: universities compete on amenities and branding, while loan performance becomes a political statistic.

Delinquency also has second-order effects that arrive quickly and unevenly. Borrowers who miss payments risk damaged credit, higher costs for housing and car loans, and wage garnishment once collections restart. But the institutions that set prices and expand programs face no comparable penalty for poor outcomes. If the policy response is another round of forgiveness, the transfer runs primarily to the loan balances created by the most expensive degrees—while the underlying tuition model remains intact.

The CBS segment notes there are about 43 million Americans with federal student loans. The report’s headline figure—one in four delinquent—implies that the post-pause “return to normal” is not a return to repayment capacity, but to the enforcement machinery that was temporarily switched off.

The loans did not become riskier this year. The accounting did.