The student loan bubble is about to pop

The Washington Post ^ | April 29, 2025 6:00 a.m. EDT | Preston Cooper

[E. Pluribus Unum]

As collections resume after five years, disaster looms for delinquent borrowers.

At the outset of the covid-19 pandemic, federal student-loan borrowers won what appeared to be a reprieve. That five-year pause on payments and interest accumulation is now shaping up to be a curse in disguise. Last week, the Trump administration drew criticism for announcing that the Education Department would resume involuntary collections next month. But the squeeze delinquent borrowers will soon feel is an inevitable consequence of the suspension, exacerbated by the Biden administration’s prolonged refusal to let payments resume.

That’s because nonpayment ballooned after the pause functionally ended last October, meaning more than half of borrowers are not paying their loans on time. Data provided to me by Nelnet, the largest student-loan servicer, offers a grim look at repayment patterns.

In February 2020, the last month before the government paused payments, 60 percent of Nelnet’s borrowers were repaying their debts. Five years later, payments are due again — but the repayment rate has fallen to 38 percent.

Some of that drop results from the Education Department placing 8 million borrowers in forbearance — a temporary postponement of payments — pending courts’ decisions on legal challenges to the Biden administration’s repayment plan.

But even with this factored in, Nelnet’s data shows a spike in delinquencies compared with before the pandemic. A staggering 15 percent of borrowers are more than 90 days delinquent, which is reported to credit bureaus.

If this wave of delinquencies continues, the Education Department has warned that 10 million borrowers — nearly a quarter of the total — could be in default within a few months.

Reasons for nonpayment vary, but many stem from the pause. Some borrowers are simply unaware payments are due again — after all, the...

[RKV]

You were an adult and assumed the obligation. Not my problem if you have problems paying back what you owe. I worked in vineyards and drove trucks to help pay for my college education. And in the oil patch to pay for grad school. I have zero pity because you were stupid.

[MV=PY]

https://petersonacademy.com/

[lurk]

So sorry for the accrued debt, but Mr Obama became your loan shark a few years back and he wants his money back, assuming you don’t want your legs broken.

[usconservative]

I worked four different jobs (1 full time, three part-time) to pay off my student loans in just over two years.

These "kids" these days don't know the value of hard work, or the character it builds.

Honestly, I don't pity them. They deserve to be mocked -- HARD.

[Tell It Right]

Agreed. I worked full time pulling orders in a grocery warehouse the entire time I was in college. That made it take longer getting a BS in computer science. I finished college with an actually valuable education with little overall debt and with plenty of grunt work experience to help me appreciate office type work.

[wildcard_redneck]

Many student loan borrowers that have graduated with useless degrees while working at bars and restaurants feel like they have been conned and refuse to pay the loans back. I paid off my student loans with one big check four years after getting out of graduate school but I don’t blame them.

[E. Pluribus Unum]

Many student loan borrowers that have graduated with useless degrees while working at bars and restaurants feel like they have been conned and refuse to pay the loans back.

The universities prey on dumb 18-year olds.

I am all for their loans being forgiven, and it should come out of the endowments of the universities that exploited them.

[DIRTYSECRET]

4 year of college got my bud in a cubicle answering phones. A good start.

[blackdog]

The #1 funding source of student loans happens to be the federal employees pension and retirement funds.

Karma.

[Chickensoup]

They need to sue the colleges and the loan banks.

Lots of money tied up in colleges trusts and endowments and property.

[rellic]

“I worked in vineyards and drove trucks to help pay for my college education. And in the oil patch to pay for grad school. I have zero pity because you were stupid.”

Most university students on a BA degree track
are stupid. It is easy money for the university,
dumb shit in; educated dumb shit out.

I’m pretty sure I can teach a calculus 101 course
better than any “Karen” just out of school.
I may have moments with Diff/EQ for structures.
but I could lead the students into discovery.

That is my point, just making the Universities
money is job 1!
Making mankind and our society better educated is just
an afterthought.

[odawg]

“I am all for their loans being forgiven,”

I am for adjustments, otherwise, their lives are destroyed.

I was listening to Dave Ramsey once and a wife called up and said she and her husband had a combined student debt of $400,000, working on PhDs in a not very lucrative profession. Ramsey was speechless.

[Tell It Right]

Many student loan borrowers that have graduated with useless degrees while working at bars and restaurants feel like they have been conned and refuse to pay the loans back.

And

The universities prey on dumb 18-year olds.

IMHO us conservatives are missing an opportunity to point out to the younger generations that they got conned by government employees in high school and more government employees in college (assuming they went to public schools). Their problem should be a life lesson to not trust government.

[woweeitsme]

Hey...you don’t need to go to college to get a good job and make a living. I always told my kids that attitude is is more important aptitude. There are smart people who have no idea how to interact with others. If you go into a job with ability to learn, cooperate, and take some direction, most bosses will work with you and help you move up the ladder.

[rbg81]

Many student loan borrowers that have graduated with useless degrees while working at bars and restaurants feel like they have been conned and refuse to pay the loans back.

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That’s one way to look at it. But I think the vast majority of them know exactly what they are doing. They choose the easiest possible majors and try to make college one big party. I wonder how many of them spend student loan $$ on things like Starbucks coffee and expensive sneakers?

Some do they get smart and realize the power of hard work and delayed gratifiction. But many never do and think the Government is their sugar daddy.

[T.B. Yoits]

These students need to discharge those loans in bankruptcy. Until enough students do so, the racket will continue.

From 2020:

https://www.npr.org/2020/01/22/797330613/myth-busted-turns-out-bankruptcy-can-wipe-out-student-loan-debt-after-all

"...a federal judge in New York discharged more than $220,000 in student loans for a borrower. In her ruling, Chief Bankruptcy Judge Cecelia Morris criticized the fact that even many lawyers "believe it impossible to discharge student loans." She added, "This Court will not participate in perpetuating these myths.""

[Presbyterian Reporter]

I read the entire WAPO story. At the end they wrote:

“””If you have student loans, Post Opinions wants to know how you’ve managed that debt over the past five years, and what the change in collections policy means for you. Submit your responses and they might be published as letters to the editor.”””

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In other words WAPO is begging for sob stories so they can write more articles about how mean Trump is.

[alternatives?]

They never mention that a disproportional percentage of borrowers are female and they are the slowest repayors.

[E. Pluribus Unum]

They never mention that a disproportional percentage of borrowers are female and they are the slowest repayors.

That's because 60% of "college graduates" are female.

"White, college-educated women" are also the preponderance of BLM and Antifa "protesters."

Coincidence?