By: Carla Fletcher

Nearly a quarter (23%) of Texas student loan borrowers who entered repayment between 2020 and 2025 are more than 90 days behind on their student loan payments, according to institutional nonpayment rates released by Federal Student Aid last week.

What Is an Institutional Nonpayment Rate?

This rate represents the percentage of an institution’s Direct Loan borrowers who entered repayment between January 2020 and May 2025 and were more than 90 days behind on their federal student loan payments as of mid-August 2026, including being in default.

This can be seen as an early warning indicator of student loan repayment trouble. For example, if a college has an institutional nonpayment rate of 25%, that means one out of every four borrowers included in the measure was more than 90 days delinquent at the time of measurement. The nonpayment rate is an important indicator, but it is not the same as the federal cohort default rate. A high nonpayment rate does not necessarily mean that all of those borrowers will eventually default, but it can help colleges identify repayment challenges earlier and provide insight into the health of their student loan repayment portfolio before official cohort default rates are calculated.

How Texas Compares

The overall nonpayment rate in Texas was 23%, but there are large differences by sector. The state’s private nonprofit and public four-year institutions have relatively better rates compared to the public two-year and for-profit sectors. All or nearly all public two-year and for-profit institutions have nonpayment rates above 20%, compared to just under half (47%) of private nonprofit institutions and 17% of public four-year institutions. Notably, 79% of Texas for-profit institutions have nonpayment rates above 35%.

While the overall trends are consistent with expectations, and the rates in Texas are typically higher compared to national rates, the Texas community college sector stands out as an area that may warrant closer attention. Nationally, fewer than one in five public two-year institutions exceed the 30% threshold, compared to nearly half (45%) of public two-year institutions in Texas.

Why Community College Rates May Be Higher

Several factors may help explain higher nonpayment rates at community colleges. Borrowers who leave college without earning a credential are more likely to default. Compared with borrowers who do not default, those who do are also more likely to be older and students of color.

These patterns place community colleges at the center of the issue. Although community college students are less likely to borrow than students at four-year institutions, those who do borrow are more likely to default.

Texas community college students reflect many of these broader patterns. Completion rates at community colleges are lower than at four-year institutions (44% compared with 66%) and more than three-quarters of community college students (78%) attend part-time. In addition, more than one-third are age 22 or older, and Texas community colleges educate 70% of the state’s minority freshmen and sophomores.

What Colleges Can Do

The nonpayment rate gives schools a head start. The official cohort default rate carries real penalties and high rates can lead to institutions losing eligibility for the Pell Grant and Direct Loan programs. A high nonpayment rate is a sign to act before the default rates catch up. Schools with high rates can:

Find out which borrowers are behind on payments, especially those who left without completing a credential.
Reach out early with information on income-driven repayment and other repayment options.
Strengthen exit counseling for students – those who withdraw as well as those who graduate.
Pair repayment outreach with re-enrollment offers, since finishing a credential is the best repayment tool.

As policymakers and institutional leaders focus on student success and workforce development, understanding the factors contributing to repayment difficulties will be increasingly important.

Carla Fletcher is a Principal Research Associate at Trellis Strategies, where she has worked since 2005 researching higher education access and success through an affordability and student wellness lens. She holds both bachelor’s and master’s degrees in Applied Sociology from Texas State University. Before joining Trellis, she worked as a researcher at the Child Support Office in the Office of the Attorney General.