What to Know About Repaying Student Loans, as Delinquency in California Skyrockets

More than 350,000 Californians are now behind on their student loan payments — the highest delinquency rate for any type of debt in over two decades, according to the California Policy Lab.

It’s also the highest rate of delinquencies that UC Berkeley California Policy Lab executive director Evan White said he’s seen in the data “for any credit product, including student loans, auto loans, mortgage loans, credit cards” since 2004.

The missed payments are a symptom of a financial safety net that was already frayed before the COVID-19 pandemic greatly disrupted loan repayments. And now, that safety net is unravelling as borrowers face higher bills, fewer repayment options and limited eligibility for loan forgiveness programs amid a system that even experts call confusing.

“The federal student loan system is broken,” said Mike Pierce, Executive Director and co-founder of the legal advocacy group Protect Borrowers. “It’s been broken for decades, and lawmakers have failed to deal with that.”

Amid this uncertainty, here’s what to know if you’re a borrower in the process of paying off student debt — from the changes to federal loan forgiveness and income-driven repayment plans to the latest legal proceedings and how they might affect you.

Jump straight to:

• What are my options for income-driven repayment?
• I work for a nonprofit organization. Can I still qualify for Public Service Loan Forgiveness (PSLF)?
• I’m enrolled in the SAVE plan. What should I be doing? 
• How will the ‘One Big Beautiful Bill’ impact my loans?
• I think my loan servicer made a mistake. What should I do?

How did my student loans get so complicated?

When the COVID-19 pandemic hit in 2020, the federal government paused student loan payments and interest, giving borrowers an unprecedented break that lasted over three years. Many Californians used that breathing room to pay down credit card debt, build up savings, and even open new lines of credit. Financial wellness metrics improved across the board, according to White and the California Policy Lab.

But as pandemic-era supports ended and loan payments restarted, that relief has now given way to widespread confusion. Borrowers faced mixed messages about repayment deadlines, forgiveness options and which income-driven plans they could actually enroll in. Federal loan forgiveness became a political hot potato during and after the 2020 election, with repayment deadlines rescheduled under President Donald Trump’s first term … and again under President Joe Biden. And each delay created more uncertainty about when payments would resume and whether borrowers might qualify for relief, said Mike Pierce.

Then the legal battles began. The SAVE plan used by millions of student loan borrowers — along with several income-driven repayment options that predated this Biden-era plan — became embroiled in court challenges that have continued to drag on for months.

Now, student loan borrowers have found themselves stuck in limbo for most of 2025: unable to enroll in affordable repayment plans, unsure whether they qualify for loan forgiveness and unclear about the latest and most accurate guidance.

The result is a system where even borrowers who want to pay are struggling to get a handle on their loans, according to Jonathan Glater, a law professor at the University of California, Berkeley, and co-founder of the Student Loan Law Initiative.

“One of the criticisms of this whole complicated edifice that we’ve got is that it’s very, very difficult for borrowers to navigate,” said Glater. “It is way too complicated.”

Which borrowers are most affected right now?

Lower-income student loan borrowers are “mostly worse off than they were before the pandemic happened,” said the California Policy Lab’s White, who’s also a member of the research team that created and maintains the California Credit Dashboard.

Older borrowers are the most likely to be impacted in California, White added. According to the California Policy Lab. One possible reason for higher delinquency rates among older borrowers is that they typically owe a larger monthly payment on their student loans.

The average Boomer with student debt owes $150 per month in student loan payments — 2.4 times that of the average Millennial ($62/month) and 5.8 times that of the average Gen Zer ($26/month). These loans may have been used to pay for their own education, one or more children’s education — or a combination.

The financial burden hitting older borrowers might also be attributed in part to the way the federal loan repayment system works, said White.

Loan repayment plans are designed to limit the amount of payments borrowers make to a fixed period of time. But after a long pandemic pause, borrowers may be resuming their payments with fewer monthly payments remaining — and a balance that hasn’t diminished, or has actually grown from interest.

The result: higher monthly payments than what borrowers may have been paying even prior to pandemic assistance.

What are my options for income-driven repayment?

After a two-month freeze, the Department of Education is now processing applications for income-driven repayment (IDR) plans again.

There are currently four IDR plans available to borrowers with federal student loans. (Federal loans generally include “direct” or “federal” in the title, but you can find a complete list of eligible loan types here, to make sure yours qualifies.)

It’s important to carefully compare plans, as each borrower’s situation is different. You can use this Federal Student Loan Simulator to calculate and compare your monthly payments under each of the available federal IDR plans.

All IDR plans base your monthly loan payment on a percentage of your discretionary income, in combination with your family size. The exact percentage of your income and how long you will have to repay varies by plan.

You can find detailed information about all federal IDR plans here, but here are the highlights at a glance:

• Pay As You Earn (PAYE) Repayment Plan
  • Capped at 10% of discretionary income, repaid over 20 years
• New Income-Based Repayment (IBR) Plan
  • For eligible loans borrowed after July 1, 2014
  • Capped at 10% of discretionary income, repaid over 20 years
• Old Income-Based Repayment (IBR) Plan
  • For eligible loans borrowed before July 1, 2014
  • Capped at 15% of discretionary income, repaid over 25 years
• Income-Contingent Repayment (ICR) Plan
  • Capped at 20% of discretionary income, repaid over 25 years

Apply for an income-driven plan for the first time, or switch between plans, here.

The benefits of income-driven repayment plans

For some people, payments on an IDR plan can be as low as $0 per month. Others may be able to take advantage of another perk — exemption from interest on their loans — if their income-adjusted payments wouldn’t cover the interest accruing on their student loans each month.

IDR plans also operate on a fixed schedule, meaning you’re committed to repaying them over a period of 20 or 25 years — although the new Repayment Assistance Plan (RAP) will offer a 30-year repayment period beginning in 2028. While paying several decades of loan payments may not sound like your idea of a great time, any remaining loan balance could be forgiven outright if your federal student loans aren’t fully repaid by the end of this period.

The drawbacks of income-driven repayment plans

Before you celebrate loan forgiveness, be sure to read the fine print. Loan balances forgiven at the end of an IDR repayment period are actually subject to income tax — leading savvy borrowers to save for the “tax bomb” that will accompany their emancipation from student debt.

Once you enroll in an IDR plan, you should also set a reminder to update, or “recertify,” your income and family size every year, even if there has been no change.

The consequences for borrowers on IDR plans who don’t recertify their incomes are strict, as you could be removed from your plan and placed on an alternative plan where monthly payments are not based on income, leading to higher monthly payments and resumed interest.

And while you can reapply for your preferred IDR plan, recertification issues can cause delays in loan forgiveness, not to mention financial stress. The Department of Education warns that new applications for IDR plans typically take 30 days to process – leaving you on the hook for any student loan payments and interest accrued in the meantime.

Apply for an income-driven plan for the first time, or switch between plans, here.

I work for a nonprofit organization. Can I still qualify for Public Service Loan Forgiveness (PSLF)?

If you work for a nonprofit or government employer, Public Service Loan Forgiveness (PSLF) can be a powerful tool for managing your student debt.

Here’s how it works: make 120 qualifying monthly payments over a 10-year period while working full-time for a qualifying employer, and any remaining federal student loan debt gets forgiven — without that “tax bomb” of income-driven repayment plans.

PSLF was created by Congress in 2007 specifically to help recruit and retain talented people in public service jobs that often pay less than private sector positions. More than 1 million public servants, from teachers, nurses and social workers to librarians and public defenders, had their loans forgiven through this program under the Biden administration.

Now, President Donald Trump’s second administration is seeking to change who qualifies. An executive order signed by Trump in March and set to take effect July 1, 2026, would allow the education secretary — not the courts or Congress — to deny loan forgiveness to workers whose employers engage in activities deemed to have a “substantial illegal purpose.”

The examples listed in the rule include “aiding and abetting violations of Federal immigration laws” and providing certain types of gender-affirming care. San Francisco and several other cities are suing to block this rule.

Protect Borrowers has been involved in filing several of these lawsuits, claiming that restricting public service loan forgiveness is “an attempt to target organizations and jurisdictions whose missions and policies do not align with [the Trump administration’s] political positions on immigration, race, gender, free speech, and public protest.”

“The Trump administration recognized that there’s real power in the federal government, because it is the creditor for 40 million people,” Pierce said. He is concerned that public service workers could lose access to loan forgiveness simply because their employer resisted federal immigration enforcement or maintained diversity, equity and inclusion programs — even though those local policies may be perfectly legal.

So amid this legal action, what should you do if you’re working toward PSLF forgiveness?

1. Don’t wait

Submit your employment certification forms now to get credit for the payments you’ve already made.

2. Keep meticulous records 

Your employment, every loan payment you’ve made — collect screenshots, confirmation emails, everything.

3. Work extra-fast if you’re close to hitting that 120-payment mark

Prioritize reaching that threshold before the July 2026 deadline when this rule takes effect.

And if you’re currently enrolled in SAVE, consider switching to another income-driven repayment plan to resume qualifying PSLF payments.

You should also pay attention to how this lawsuit unfolds, said Pierce. The plaintiffs argue the Education Department is overstepping its authority and rewriting what Congress clearly defined as “public service” — any government job or 501(c)(3) nonprofit. The courts will ultimately decide whether the secretary has the power to add political litmus tests to a program Congress designed to support all public service workers.

In the meantime, protect yourself by documenting everything and staying informed about your rights.

I’m enrolled in the SAVE plan. Should I switch to another income-driven repayment option?

The SAVE plan was designed to be a lifeline — the most affordable income-driven repayment option the federal government had offered to date.

Promising shorter repayment periods, more generous income calculations that would lower monthly payments and a faster path to loan forgiveness for low-income borrowers, the SAVE plan had eight million enrollees as of May 2025.

But Missouri and several other Republican-led states filed lawsuits challenging the SAVE repayment plan and arguing that the Biden administration had overstepped its authority beginning in spring 2024 — and SAVE has been frozen in legal limbo ever since.

If you’re enrolled in SAVE, here’s what’s happening with your loans right now: You haven’t been required to make payments since last summer while the case winds through the courts.

You’re in what’s known as “forbearance,” and while those months do count toward eventual income-driven repayment forgiveness (typically after 20 to 25 years), they don’t count as qualifying payments toward Public Service Loan Forgiveness.

And as of August, interest has resumed accruing — which means your balance will continue to grow each month, unless you make payments to offset the interest.

For borrowers working toward PSLF who are close to the 120-payment finish line, staying in SAVE means you’re losing time: those paused months won’t count, and you may need to use a “buy back” option later to pay for these months retroactively.

The good news? You have options. Applications for other income-driven repayment plans — Income-Based Repayment, Pay as You Earn, and Income-Contingent Repayment — are now open again after a months-long delay. If you’re pursuing Public Service Loan Forgiveness, switching to one of these plans means your payments will start counting toward that 120-payment requirement again.

And if you’re simply trying to stop your balance from ballooning, moving to an active repayment plan gives you more control. The application process may take a few weeks, but for many borrowers — especially those close to PSLF eligibility or watching their interest pile up — making the switch may be worth it to get back on track.

How will the ‘One Big Beautiful Bill’ impact my loans?

If you’re a federal student loan borrower, the H.R.1 budget, known as the One Big Beautiful Bill Act, that passed in July, included changes to the federal loan system that could impact you.

The SAVE plan is being shut down by July 1, 2028 — but so are two other income-driven repayment plans: Pay as You Earn (PAYE) and Income-Contingent Repayment (ICR). If you’re currently enrolled in either of these plans, you’ll need to switch before that deadline.

The Income-Based Repayment (IBR) plan, a Reagan-era program that was implemented by Congress, will remain available for current borrowers. Pierce said it’s worth considering now, especially since it offers loan forgiveness after 20 or 25 years instead of the 30 years required under the Trump administration’s proposed replacement plan.

That new Repayment Assistance Plan (RAP) won’t be ready until next year, and key details haven’t been revealed yet — leaving borrowers with limited information to plan ahead.

The spending bill includes provisions that also affect future students: new borrowers taking out loans after July 1, 2026, will not have access to traditional income-driven repayment plans at all. They’ll be limited to the new RAP or a standard fixed-payment plan, both with far less flexibility than previous options.

The law also introduces borrowing caps for graduate and professional degree students ($20,500 annually, $100,000 lifetime) and parents taking out loans to assist with a child’s education ($20,000 per year, $65,000 per child).

Student loan experts worry these caps will push more borrowers toward private lenders, which charge higher interest rates, offer less favorable terms and don’t qualify for any income-driven repayment or forgiveness programs.

“You’re pushing people into the private student loan market and away from safe federal student loans with good consumer protections,” said Pierce.

According to Jonathan Glater, H.R.1 does nothing to address why student debt became a crisis in the first place: skyrocketing college tuition costs. By capping federal borrowing without tackling affordability, the law may simply shift the burden from federal loans to private debt, he warned — or price students out of higher education entirely.

“My fear is that what we are seeing is a lifting of the ladder of higher ed opportunity higher, so it’ll be out of reach for more people,” said Glater.

If you’re planning for graduate school or helping a child pay for college, factor these new limits into your timeline and consider whether starting before July 2026 would give you access to more generous borrowing options.

And document everything — experts caution that, considering the sheer volume of changes, and the Education Department operating with reduced staff, keeping detailed records of your loans, payments, and applications is more important than ever.

I think my loan servicer made a mistake. What should I do?

Your federal student loans might be owned by the government, but they’re managed by private loan servicing companies.

“It is a black mark on the student loan system that people need to know what a student loan servicer is,” Pierce said. These are companies contracted to administer and collect your loans, handle your payments, process paperwork for income-driven repayment plans and answer your questions.

The problem? In their role as the middleman between you and the Department of Education, several loan servicers have made serious administrative errors and have been targets of class action lawsuits for mishandling borrower accounts.

“We hear the worst stories about lost paperwork, changing balances, the rules being rewritten for people right in the middle of paying their loans back when those loan companies change,” said Pierce.

If you’ve been repaying loans for a while, you’ve probably experienced at least one transfer of your debt from one servicer to another. According to Pierce, each transfer creates an opportunity for information to get lost, payment counts to be recorded incorrectly or for the servicer to lose contact with you entirely.

If you think your loan servicer made a mistake — whether it’s incorrect payment counts, wrong balance information, or problems with your repayment plan — don’t just accept it, urged Pierce.

Protect Borrowers has detailed resources on their website explaining what steps to take when your servicer gets it wrong, which include:

Start by documenting everything

Take screenshots of your account, save emails and letters, and keep records of every phone call, said Pierce — including the date, time, and name of the representative.

File a formal complaint with your servicer first

…but be ready to escalate to the Federal Student Aid Ombudsman if the issue isn’t resolved.

California borrowers have an additional resource: the state’s dedicated Student Loan Ombudsman, who can help navigate disputes and advocate on your behalf.

Be proactive and persistent

Loan servicers handle millions of accounts, and mistakes happen — but those mistakes can cost you thousands of dollars or years of progress toward forgiveness if they’re not caught and corrected, said Pierce.

Don’t assume your servicer has correct information for you

…especially after a transfer. Regularly check your account, verify your payment counts match your records, and if something looks off, speak up immediately. The more documentation you have, the easier it will be to prove an error and get it fixed, said Pierce.

His advice for borrowers “that are just stuck” is to go to your lawmaker and open up a case with your local member of Congress or your state senator.

“There’s only so much you can do with the current law, but for people that are stuck waiting on hold … or feel like they’ve been lied to by a student loan company, often going to your member of congress and opening up a case with them is the best way forward here,” he said, adding that Congressional casework can cut through red tape when the Education Department is overwhelmed or unresponsive.

I need help navigating my student loans, but I’m not hearing back. Why?

The Department of Education has been hit hard by cuts under the Trump administration; its workforce was slashed in half earlier this year, dropping from about 4,100 employees to roughly 2,200.

Many of the dismissed employees worked within the Federal Student Aid department and assisted with the technical administration of student loans, including handling disputes between borrowers and loan servicers and answering FAFSA questions.

The recent government shutdown has only made things worse, furloughing about 87% of the department’s remaining workforce.

The practical impact? Expect longer wait times for processing income-driven repayment applications, employment certification for PSLF and responses to borrower disputes.

The good news is you’re not on your own. While the federal government has scaled back support, there are still nonprofit organizations and state resources available to help you navigate your loans.

The National Consumer Law Center offers Student Loan Borrower Assistance, providing free information for people struggling with payments or dealing with default. Protect Borrowers focuses on existing pathways to debt cancellation through the Cancel My Student Debt campaign. And California borrowers have access to the state’s dedicated Student Loan Ombudsman, who can help resolve disputes with loan servicers.

“These big structural problems, the fact that [borrowers] can’t afford their loan payment or that nobody will return their phone calls, this isn’t because they did something wrong,” Pierce added. “It’s scary for people that are staring down a bill they can’t afford. But this is a function of public policy. It’s not an individual failing.”