Only 10.9% of Federal Student Loan Borrowers are Repaying Their Loans

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By Kristen Kuchar

October 13, 2020

Currently, only 10.9% of federal student loan borrowers are repaying their student loans, according to financial aid expert and publisher of, Mark Kantrowitz. 

There are two main types of federal student loans – Direct Loans and Federal Family Education Loan Program (FFELP) Loans. 

There are 35.2 million borrowers in the Direct Loan program and only 300,000 are in active repayment, according to Kantrowitz. Only 48,000 of the 5.83 million FFELP loans that are held by the U.S. Department of Education are in active repayment. Of the borrowers in the FFEL program with loans not held by the U.S. Department of Education, 4.25 million are in active repayment.

In March, due to the COVID-19 pandemic, President Trump signed the CARES Act, which allowed federal student loan borrowers a chance to stop making payments on qualified federal student loans. During this payment pause, no monthly student loan payment is due and loans are not accruing interest. The payment pause was automatic, so borrowers did not need to request it as they would with a typical deferment.

Originally, the payment pause was going to end September 30, 2020, but it was extended throughout the end of the year, until December 31, 2020.

For borrowers working towards Public Service Loan Forgiveness, each month on this payment pause counts as a qualifying payment, if they continue to work full-time for a qualifying employer. For borrowers on an income-driven repayment plan, this time counts towards the 20- or 25-year repayment term as well. 

The payment pause did not include FFELP loans held by commercial lenders, Federal Perkins Loans owned by a college and private student loans. 

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Some borrowers that chose not to pay during the time may have used the opportunity to build an emergency fund, invest, or work towards other financial goals. However, with millions of Americans filing for unemployment, it’s likely many struggling borrowers used that money to pay for other essential expenses.

There are options for federal loans if a borrower is unemployed or struggling financially. For federal loans, borrowers can apply for an unemployment deferment or an economic hardship deferment.

Most federal loans are also eligible for an income-driven repayment plan. This allows borrowers to make monthly payments based on their income and family size and could be as low as $0. However, with those low payments, interest will still be accruing and the loan size will increase.

For those working in a public service job, such as a teacher, doctor, or police officer, there is a chance to qualify for Public Service Loan Forgiveness. After 120 qualifying payments and meeting the annual requirements, a borrower can receive loan forgiveness.

Some borrowers with steady income may consider refinancing student loans, especially if they have a high interest private loan. However, all federal loan borrowers should think carefully and be cautious about refinancing federal loans. Refinancing federal loans into a private student loans means a loss in several benefits – income-driven repayment plans, potential for loan forgiveness, generous deferment periods, and potential for subsidized loans

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