Student loan repayments have followed an erratic path since March 2020. Payments were suspended at the start of the pandemic, resumed in October 2023, and many borrowers received forgiveness under the Income Based Repayment plan before that program was suspended again in July 2025.
The regulatory whiplash has created predictable consequences. As of April 5, 8 million federal student loan borrowers were 90 days or more past due on their payments, according to TransUnion. Nearly a third of all borrowers are now delinquent, and credit scores among student borrowers have dropped by an average of 60 points.
The damage extends beyond individual credit reports. Lenders and servicers face mounting operational costs from increased customer service volume, technical updates to payment systems, and compliance overhead. Call centers struggle with volume while navigating unclear guidance that puts their reputation at risk regardless of whether they’re perceived as too lenient or too aggressive.
“Lenders need to be very cautious about the space because a lot of these payments that have been suppressed since COVID are coming back to being collected,” said Brian Riley, Director of Credit at Javelin Strategy & Research. “All the judgments they’ve made in lending have used an ability to repay rule, but now these are back on their files and actively being collected. It very well could displace a lot of the good decisions that were made before by the realities of student debt.”
The Communication Gap
Traditional outreach methods fail with Gen Z and Millennial borrowers. Direct mail goes unopened. Phone calls go unanswered. These borrowers live on their phones, but not in their voicemail.
What does work? Mobile notifications, SMS, and email. According to the 2025 ACI Speedpay® Pulse Report, more than 70% of Gen Z and Millennial consumers prefer receiving billing reminders via mobile notification or text. More than half say they’re more likely to pay on time when prompted digitally.
The preference goes beyond communication channels. These borrowers expect self-service tools that allow them to make urgent payments, update account information, and adjust repayment plans without waiting on hold or explaining their situation to a representative.
“They don’t feel the need to interact with somebody,” said Dylan Lerner, Senior Analyst of Digital Banking at Javelin Strategy & Research. “They like being able to make a payment on their own time, in their own way. And digital wallets are one way to do that.”
Why Digital Wallets Matter
More than a third of consumers now use mobile wallets to store nonpayment items such as digital tickets, boarding passes, and loyalty cards, according to ACI Worldwide research. Most consumers say they would stop using a provider that doesn’t support digital wallet options.
The trend is particularly pronounced among younger consumers at the center of the student loan crisis. They grew up storing items in digital wallets and using them for payments across multiple services. The behavior is already established.
ACI Walletron® has integrated with Google Wallet, Apple Wallet, and Samsung Wallet, managing more than 10 billion bills across these platforms. The digital passes provide one tap access to payment portals and use push notifications to deliver timely reminders about due dates.
The functionality extends beyond simple payment reminders. Lerner notes that digital wallet integration allows for more flexible payment options, including micropayment adjustments that borrowers can schedule according to their own cash flow cycles. Traditional loan servicer payment portals often limit borrowers to predetermined payment amounts and schedules.
Building in Flexibility: Helping Borrowers Take Control
Payment deferral features address a practical reality: borrowers sometimes need breathing room. The ability to request short-term deferrals through self-service tools reduces the friction of financial hardship and also maximizes the potential for collection.
“That’s where Delay My Payment becomes a valuable tool,” said Darcy Locke, SVP, Head of Sales for ACI Speedpay. “This self-service feature allows borrowers to request a short-term deferral within servicer defined parameters without needing to call an agent, wait on hold, or explain their financial hardship.” If you want to learn more, click to read her entire blog post.
For servicers, deferral requests provide valuable information. When a borrower proactively requests a payment delay, it signals financial stress before an account becomes delinquent. That early warning creates an opportunity for engagement rather than collection. This is a significant distinction and gives the loan provider a chance to actually deepen their relationship with the borrower.
“A student loan account holder may otherwise not have access to their servicer,” said Lerner. “When the biller receives information about a payment delay or hardship, it opens a window into what the borrower is experiencing. That creates an opportunity to engage more meaningfully, offer relevant support, and become a trusted resource in their financial journey.”
The engagement opportunity matters because it helps borrowers protect their credit and build financial confidence. When a borrower can navigate a temporary hardship through intuitive self-service tools, they’re more likely to stay on track with payments, avoid delinquency, and preserve their credit score. For younger borrowers, these moments can lay the foundation for long-term financial health.
The Path Forward
The student loan repayment crisis will not be resolved quickly. Regulatory uncertainty will persist, borrower confusion will continue, and servicers will face ongoing operational pressures. Digital tools that meet borrowers where they already are, on the platforms they already use, with the flexibility they need, represent the most practical path forward. This is proving to be a gamechanger.
The 2025 ACI Speedpay® Pulse Report provides additional insights on consumer billing and payment trends across industries.
About the Sources:
Brian Riley, Director of Credit, Javelin Strategy & Research
Dylan Lerner, Senior Analyst of Digital Banking, Javelin Strategy & Research
Darcy Locke, Head of ACI Consumer Finance
References:
- TransUnion student loan delinquency data (April 2025)
- ACI Speedpay Pulse Report 2025
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