The share of Californians with student loans who are 30 or more days behind on payments surged in the first two quarters of 2025, the latest data available, according to the California Credit Dashboard. Today, the delinquency rate among student loan holders is more than double its pre-pandemic level (5.2% in June 2019 vs. 11% in June 2025), highlighting financial strain as repayment obligations on federal student loans fully resumed after a prolonged pause sparked by the pandemic. At the same time, recent federal policy changes are tightening access to student loans and reducing flexibility in repayment plans. How are Californians faring in this new financial aid landscape?
The recent federal budget bill introduced major changes to federal student loan programs. Among its many new provisions, the bill imposes new borrowing caps on multiple loan programs and establishes a lifetime borrowing limit for federal student loans. It also restricts access to income-driven repayment options and places borrowers into a more limited set of repayment plans. Protections such as deferments and forbearance have also been reduced.
The good news is that, despite rising delinquencies and tighter federal loan policies, California students rely less on loans than their counterparts nationwide. With relatively low tuition and generous state aid, California undergraduate students are less likely to take out student loans in the first place. When they do, they borrow at a lower rate than students do nationally (23% borrowing an average of $7,234 vs. 38% borrowing an average of $7,753 in 2022–23).
For federal student loans specifically, California undergraduates borrow much below the national rate (22% vs. 37%), while their average loan amount is just slightly higher ($5,419 vs. $5,705). Student loan outcomes also vary by institution type and degree completion: public college students tend to have less debt and fewer negative repayment outcomes.
Looking ahead, the state’s challenging budget situation and continuing declines in K–12 enrollments may increase fiscal pressure on colleges. At the same time, ongoing concerns about college affordability and uncertainty about the value of a college degree may shape how students approach financing and higher education decisions. These dynamics underscore the importance of maintaining strong state aid and support programs to help students manage costs, minimize debt, and stay on track toward earning a degree. With more transparent information on colleges and programs, students can also better navigate this environment and make informed decisions that align with their goals and offer a strong return on investment.
