New data released by Federal Student Aid paints a stark picture of the post-pandemic student loan repayment landscape. The numbers reveal a 6.5-fold increase in borrowers 91-180 days delinquent compared to the pre-COVID payment pause. As of FYQ2 of 2025, a staggering 5.95 million borrowers owe $161.6 billion in this critical delinquency window. This is a dramatic surge from the 0.91 million borrowers owing $27.7 billion in FYQ1 of 2020.
This explosive growth in serious delinquency signals a looming crisis for institutions. The sheer volume of borrowers struggling to make payments indicates a potential tidal wave of defaults on the horizon.
The 40% Threshold: A Real and Present Danger for Title IV Eligibility
For colleges and universities, these delinquency figures should serve as an urgent wake-up call. The trajectory of these numbers strongly suggests that Cohort Default Rates (CDRs) could easily surpass the critical 40% threshold. Crossing this line carries severe consequences, most notably the risk of losing Title IV federal student aid eligibility. The loss of Title IV funding would be catastrophic for most institutions, severely impacting enrollment and financial stability.
The Time for Proactive Default Aversion is NOW (actually, more like 12 months ago)
Waiting to address this issue is no longer an option. The data demonstrate that borrowers are already deep into delinquency, making them highly likely to default. Colleges and universities must take immediate action to implement robust and effective default aversion strategies.
Here’s what your institution needs to do NOW:
- Acknowledge the Urgency: Recognize the gravity of this new data and the very real threat it poses to your institution’s Title IV eligibility.
- Implement Proactive Outreach: Don’t wait for borrowers to default. Utilize data analytics to identify students and alumni in the early stages of delinquency and implement targeted outreach campaigns.
- Enhance Financial Literacy Resources: Provide comprehensive and accessible resources to help borrowers understand their repayment options, manage their finances, and avoid delinquency.
- Offer Personalized Counseling: Make student loan repayment counseling readily available. Equip your staff to provide individualized support and guidance to struggling borrowers.
- Leverage Technology Solutions: Explore and implement technology-driven solutions that can automate outreach, track borrower engagement, and provide personalized support at scale.
- Partner with Experts: Consider partnering with organizations specializing in default aversion, like IonTuition, to leverage their expertise and proven strategies.
ION is a Cost-Neutral Option because the Cost of Inaction is Too High
The consequences of inaction are dire. Allowing CDRs to climb unchecked risks the very foundation of your institution’s ability to serve students through federal financial aid. The time for passive observation is over.
Take control of your institution’s future. Prioritize default aversion TODAY. The alarming delinquency data is a clear indicator of the challenges ahead. By acting decisively now, you can help your alumni navigate repayment and safeguard your institution’s Title IV eligibility. Don’t wait until it’s too late.
Contact ION today to learn how our comprehensive default aversion solutions can help your institution proactively address this crisis and protect your future.