US student loan debt and repayment policies

What happened: Over 643,000 federal student loan borrowers are awaiting debt forgiveness or enrollment in affordable repayment plans, as of a recent court filing. Meanwhile, high school students are taking on excessive debt, with some borrowing up to $300,000 for jobs paying only $30,000. Interest rates on federal student loans are set to rise in the 2026-27 academic year, and 2.6 million borrowers fell into default in early 2026. The Trump administration has finalized federal student loan caps, affecting borrowing limits.

Market impact: The student loan industry, including lenders like Sallie Mae and Navient, is affected by changes in repayment plans and forgiveness policies. Borrowers, totaling 44.7 million Americans with $1.71 trillion in debt, face increased financial strain due to rising interest rates and default risks. This impacts the broader economy, as student loan debt is a significant barrier to homeownership and economic growth.

What to watch next: In July 2023, the Department of Education is expected to announce changes to income-driven repayment plans, which could affect millions of borrowers. The Federal Reserve's next interest rate decision in June 2023 may influence federal student loan rates. Additionally, the 2023-24 federal budget, to be released in February 2023, could include further changes to student loan policies.