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Only 36% of the most common federal student loans are being repaid on time, according to recently released Department of Education data on the Direct Loan program.

While 26% of the $685.7 billion in outstanding loans belong to borrowers still in school or in their grace periods — they’re not expected to be repaying anything at the moment — that still means that 24% of outstanding Direct loan dollars are in forbearance or deferment (a kind of repayment limbo), and nearly 6% are in default. Only 44% are in repayment, and of that $300 billion, 17% of those dollars are at least 31 days past due.

Basically, people are having a heck of a time paying back these loans.

The figures released in June include Direct loan performance data over the last several quarters, most recently the status of loans in the third quarter of the federal fiscal year. Between quarter three 2013 and 2014, 1.5 million Direct loans entered repayment — at the same time, 500,000 Direct loans went into default, meaning the borrowers failed to make payments for 361 days. Another 100,000 borrowers are in the process of being transferred from delinquency to debt collectors.

When in default, the borrower loses access to loan-repayment assistance like income-based repayment, forbearance and deferment, and the entire loan balance immediately comes due. In addition, going into default takes a figurative sledgehammer to the borrower’s credit standing.

Meanwhile, about 2.8 million borrowers in repayment status are delinquent, amounting to $49.9 billion and a delinquency rate of 16% (or 17%, if you count the $1.6 billion of loans that are in the process of being sent to collections). Consider for a moment the credit card delinquency rate: 2.44% of credit card balances were between 31 and 180 days past due at the end of June, according to the most recent data from the Experian-Oliver Wyman Intelligence reports.

How Student Loan Debt Is Different

Federal student loans aren’t exactly like other consumer credit products, noted a Department of Education spokesman: They require no credit checks or ability-to-repay assessment, and there’s a host of repayment-assistance programs available to federal student loan borrowers that credit card users and homeowners don’t have. Most important, student loans help people get a valuable college education they couldn’t otherwise afford.

Despite the differences between student loans and other consumer credit products, the 16% delinquency rate among Direct loans in repayment is concerning, because there is no charge-off or foreclosure on unaffordable education debt: No matter how far behind you get, you will have to repay your student loans. (The one exception: A small portion of outstanding Direct loans, $4.9 billion, are in non-defaulted bankruptcy or disability status.)

Delinquency isn’t a certain path to default: Many of the borrowers between 31 and 90 days past due return to current status, and there’s a large difference between the amount of loans that are in that first bracket of delinquency ($23.4 billion) and those on the verge of default ($4.5 billion are between 271 and 360 days past due).

The fact that borrowers are allowed to go a year without making payments before defaulting is remarkable in the realm of consumer credit: If this were an auto loan, your car would have long-since been repossessed. Foreclosure proceedings would have already started on an unpaid mortgage.

“As a financial services guy, I’m concerned about how long the government allows loans to be past due,” said Mitchell D. Weiss, a veteran of the financial services industry and contributor to Credit.com. “There’s no way that once a consumer fails to make 12 payments they can catch up. … Seventeen percent past due is a terrible number — it’s a terrible, terrible number.”

The Department of Education argues otherwise: With 360 days before going into default and having the entire loan balance come due, the borrower has plenty of opportunity to enter a loan-assistance program or return to current status.

The burden of student loan debt isn’t as clear-cut as delinquency and default, though. The status of that $164.2 billion of Direct loans in deferment or forbearance is a bit of an unknown: Some of those loans belong to people doing things like pursuing graduate degrees or serving in the Peace Corps, but some of them belong to unemployed borrowers whose uncertain futures make it difficult to categorize their debts as troubled or not.

Options for Borrowers in Trouble

From the Department of Education’s perspective, the key is for borrowers to know the programs available to help them avoid default.

Beyond standard repayment of 10 years, you can enter an extended repayment program, which can last from 12 to 25 years. There’s graduated repayment, where your payments start out lower and you work your way up as time goes on, and with income-based repayment, your monthly payments are based on the income you report on your federal tax return.

Other things to know about: There are loan-forgiveness programs available to graduates in certain service or nonprofit fields, and borrowers in default have a one-shot chance of rehabilitating a defaulted loan with a recently revamped program.

It can’t be overstated: Student loan debt can make or break your credit, so do your best to educate yourself about your repayment options throughout the life of your loan. Make timely payments a high priority, because even one missed payment can seriously damage your credit and cause issues in other areas of your finances. To see how your student loans affect your credit scores and, consequently, your ability to qualify for other credit products and decent interest rates, you can check two of your credit scores for free each month on Credit.com.

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Image: Michele Piacquadio

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