Personal Finance

Half of student loan borrowers may be at increased risk of delinquency, GAO report finds

Key Points
  • After two years of federal student loan payment suspensions, the government expects it will not be easy to get millions of borrowers back into repayment.
  • Here's what borrowers should know if they're worried they won't be able to pay their bill come May.
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After two years of federal student loan payments being suspended because of the Covid pandemic, the government doesn't expect an easy process to get millions of borrowers back into repayment.

That's the takeaway from a new report by the Government Accountability Office, which found that as many as half of people with federal student debt may be at increased risk of delinquency.

The Education Department may also have outdated contact information for millions of borrowers, posing additional challenges to communicating about the resumption of payments, GAO found.

Even before the pandemic, the country's outstanding student loan debt balance exceeded $1.7 trillion and posed a larger burden to households than credit card or auto debt. Roughly a quarter of borrowers, or 10 million people, were estimated to be in delinquency or default.

As of now, student loan payments are scheduled to resume in May. Here's what borrowers worried about the change should know.

If you can't afford to pay your bill

If you're still unemployed or dealing with another financial hardship because of the pandemic, you'll have options come May.

First, put in a request for the economic hardship or unemployment deferment, experts say. Those are the ideal ways to postpone your federal student loan payments, because interest doesn't accrue under them.

If you don't qualify for either, though, you can use a forbearance to continue suspending your bills.

But keep in mind that interest will rack up and your balance will be larger — sometimes much larger — when you resume paying.

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If you expect your struggles to last awhile, it may make sense to enroll in an income-driven repayment plan. These programs aim to make borrowers' payments more affordable by capping their monthly bills at a percentage of their discretionary income and forgiving any of their remaining debt after 20 years or 25 years. Some payments are as little as $0.

To calculate how much your monthly bill would be under different plans, use one of the calculators at or, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit organization.

If you decide to change the repayment plan you had before the pandemic, Mayotte recommends submitting that application to do so with your servicer now.

"I have significant concerns that there will be some big servicing delays" when payments resume, Mayotte said.

What if my servicer is changing?

Three companies that serviced federal student loans — Navientthe Pennsylvania Higher Education Assistance Agency, aka FedLoan, and Granite State — all recently announced that they will be ending their relationship with the government.

As a result, around 16 million borrowers will have a different company to deal with by the time payments resume, or not long after, according to Mark Kantrowitz, an expert on student financial aid.

Double-check that your servicer has your current contact information, so that you receive all the notices about the upcoming change, experts say.

Impacted borrowers should get multiple notices about their new servicer, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

Come May, if you mistakenly send a payment to your old servicer, the money should be forwarded to your new one, Buchanan said.

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