Graduation photo by Caleb Holden on unsplash.com

More than one out of 10 Californians with student loans is behind on their payments. The Central Valley, in particular, has borrowers facing some of the steepest struggles in the state, according to a report from the nonpartisan California Policy Lab (CPL). 

The analysis, which was released on Wednesday, found that 11% of borrowers in California are at least 30 days late on their student loan payments.

After a three-year freeze due to Covid and a one-year “on-ramp” designed to ease borrowers back into repayment, collections resumed in April. 

“Older borrowers have higher delinquency rates, and both Boomers and Gen X’s delinquency rates are now at 12%, while Gen Z is at 9.4%,” said Evan White, executive director of CPL’s UC Berkeley site.

The report highlights that the Central Valley is one of the hardest-hit regions in California. Over 16% of borrowers in the Central Valley are delinquent, compared with around 10% in Los Angeles and the Bay Area. 

Researchers say that the gap from the Central Valley to other regions is likely due to fewer economic opportunities and lower household incomes in inland communities. 

Even local banks are noting the effects.

“Elevated student loan charge-offs continue to be incurred, primarily due to the recent expiration of payment forbearance programs related to the pandemic,” said Dennis Woods, president and CEO of United Security Bancshares, in the company’s second-quarter earnings report. 

Even though monthly payments are much lower than they were pre-pandemic, delinquencies are rising.

The average California borrower now owes $66 a month, which is a 37% decrease from early 2020. However, new student loan borrowing is shrinking over the last year. The average new loan in California was $13,200 over the past year, a 23% drop from 2024.