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Student loan delinquency rate spikes post pandemic
Nearly one in three student loan borrowers are at risk of defaulting on payments as early as July. This comes as delinquency and default rates soar in the wake of pandemic-era repayment relief ending. This accounts for about 5.8 million federal student loan borrowers, who were 90 days or more past due on their payments as of April 2025. This new information comes from analysis from TransUnion. LiveNOW’s Andrew Craft is getting the latest from Fox News multimedia reporter, Caroline Elliott.
President Donald Trump is revamping the Public Service Loan Forgiveness program, sparking concerns it could become a tool for political punishment.
Public Service Loan Forgiveness
The progam:
The Public Service Loan Forgiveness program cancels student loans for government employees, such as teachers and firefighters, plus many who work for nonprofits, after they have made payments for 10 years.
The backstory:
Congress created the program in 2007 to encourage college graduates to work in the public sector, where salaries are often lower than at for-profit companies.
By the numbers:
More than 1 million Americans have had loans canceled through the program, including nurses, college staffers and park rangers. And more than 2 million Americans have eligible employment and open student loans, according to December data from the Education Department.
RELATED: Student loan delinquencies dropping credit scores: What to know
More context:
You may remember in 2024 and early 2025 when President Joe Biden canceled billions of dollars in student loans for many public service workers, saying the forgiveness was a result of "needed and long overdue improvements" to the Public Service Loan Forgiveness Program.
READ MORE: Student loan forgiveness: Biden cancels another $1.2B in debt for public service workers
Student loan forgiveness changes
FILE - Students walk through the University of Texas at Austin on February 22, 2024 in Austin, Texas. (Photo by Brandon Bell/Getty Images)
The backstory:
Trump ordered changes to the program in March, declaring it had "misdirected tax dollars into activist organizations" that harm national security.
He directed the Education Department to remove organizations tied to illegal activities, singling out those that work with immigrants or transgender youth or those that support terrorism — a label he often applies to pro-Palestinian activists.
What's changing:
A new draft proposal from the Education Department suggests excluding organizations involved in "illegal activities," with definitions targeting immigration, transgender issues, and terrorism.
RELATED: Trump admin withholds $6 billion for after-school, summer programs
Why you should care:
His plan has the potential to block huge numbers of student loan borrowers from cancellation. Those who work for an ineligible employer would no longer be able to make progress toward cancellation, effectively forcing them to find a new job or forgo loan forgiveness.
The other side:
Some student loan forgiveness advocates were asked to review the policy as part of a lengthy federal rulemaking process, and told The Associated Press they see ambiguity in the definition of illegal activity.
Dig deeper:
They told The Associated Press giving the Education Department the authority to deem what is considered illegal activity could put entire hospital systems or even state governments at risk, or those that work with diversity, equity and inclusion policies that Trump has also targeted.
RELATED: Trump administration to end LGBTQ+ youth support on 988 crisis line
For example:
It raises concerns that entire hospital systems could become ineligible if a single department provides certain care to transgender youth. Likewise, the federal government could potentially strip the benefit from entire cities that limit cooperation with federal immigration officials.
What's next:
The agency is now preparing a formal proposal that will undergo a public comment period before it's finalized. It would be expected to take effect in July 2026.
The Source: Information in this article was taken from the Education Department’s draft proposal, which was obtained by and reported on by The Associated Press. Background information was also taken from The Associated Press. This story was reported from Detroit.