Californians are falling behind on student loan payments — and most ‘delinquents’ aren’t who you’d expect

Newly revealed data shows that hundreds of thousands of Californians are struggling to make their monthly student loan payments.

Earlier this year, the U.S. Department of Education announced that collections on student loans would resume in May, following a payment pause induced by the pandemic.

When making the announcement, the department noted that nearly 43 million people owed more than $1.6 trillion in student debt. Resuming collections, said Education Secretary Linda McMahon, was “for the sake of [borrowers’] own financial health and our nation’s economic outlook.”

But many borrowers haven’t been able to get back on track.

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The California Policy Lab, a nonpartisan research institute at the University of California, found that by the end of June, 11% of the state’s student loan borrowers were 30 days or more behind on monthly payments — three times higher than when the pandemic began.

Evan White, the lab’s executive director at UC Berkeley, said that figure represents more than 350,000 residents. “And if I was to guess,” he added, “we will see that go up in the coming months.”

Who’s falling behind?

Most of the borrowers who are falling behind on their payments aren’t millennials and Gen-Zers. Borrowers in their 40s, 50s, 60s and 70s “are actually struggling at higher rates,” White said.

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Courtesy California Policy Lab

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This could be in part because older borrowers tend to have higher monthly payments, he told LAist. The interest on their loans may have ballooned over the years. They might also be in debt for loans to help their children pay for school.

Difficulties vary by region

Aside from generational differences, White and his team noted that people who live in Central California are struggling to make payments at higher rates than people who live in large metro areas, including L.A. County and the Bay Area.

This “could be due to many factors,” White said, but he underscored differences in economic opportunities between the regions.

Why it can be hard to keep up

Failure to make monthly student loan payments “is a big deal,” White added. After 90 days, the Department of Education notifies national credit bureaus. This can adversely affect borrowers’ access to other loans. It can also limit their ability to secure housing and pay for other essentials, which can take a toll on their mental health.

With all the changes that have taken place at the federal level in recent years, White said, borrowers may “just be confused about what's happening.” Under the Biden administration, “there was a lot of talk about [student loan] forgiveness, and that was rolled back,” he said. Then, in July, Congress ended the Saving on a Valuable Education (SAVE) plan, an income-driven repayment plan meant to lower monthly payments and keep student loan balances from growing due to unpaid interest.

Aside from confusion, White said, some borrowers may be struggling to make ends meet.

The “overall personal financial health, both for student loan borrowers and otherwise, has declined steadily across California — and indeed across the country,” he said. “It's worse now than at any point since the Great Recession.”