Sixty-two percent of student borrowers are not current on their loans — and it may be because they don’t know they’re supposed to be paying them, a new study shows.

The analysis by the conservative-leaning public policy think tank American Enterprise Institute (AEI) says student loan repayments remain dramatically low six months after payment requirements resumed.

The federal government suspended payments at the start of the Covid pandemic and the Biden administration kept the loan suspension in place for more than four years.

Many borrowers got used to not paying and lost contact with their loan service providers. Payments started coming due again in October but many borrowers haven’t taken notice and have fallen behind.

AEI found that Nelnet, the largest federal student loan service provider, only had 38 percent of its 13 million borrowers current on their payments. That’s down from 60 percent before the loan suspension in 2020.

Around 20 percent of its accounts are delinquent and that will start hurting credit ratings for borrowers.

AEI Senior Fellow Preston Cooper, who wrote the analysis, calls the situation “dire.”

“The delinquency rates for borrowers have surged quite significantly,” Mr. Cooper says. “A lot of borrowers are at risk of delinquency default, which would mean that they would see an impact to their credit scores.”

The Federal Reserve Bank of New York found that credit scores for borrowers with loans in delinquency rose an average of 103 points during the payment freeze. Delinquencies are starting to appear on credit reports again and those credit score gains are evaporating for borrowers behind on their payments.

The Fed expects student loan delinquency to surpass pre-pandemic levels and more than 9 million student loan borrowers could face substantial declines in credit standing over the first quarter of 2025. That could make it harder for them to make major purchases or buy a home.

The loan crisis is also putting taxpayers at risk. There is $1.6 trillion in unpaid student loan debt.

“To make some money off of the student loan program, borrowers actually need to be repaying their loans and they’re clearly not doing that,” Mr. Cooper says. “If borrowers don’t pay back their loans, taxpayers will eventually have to cover those costs so this is really a very serious situation and it’s been underappreciated how bad things have gotten.”

Mr. Cooper says what’s concerning is that people who should be able to pay their loans and have good credit are still falling delinquent. He blames the repeated delays in restarting the requirement to pay.

“I think a lot of people are simply not aware that payments have resumed,” Mr. Cooper says. “It has been a stunning failure of communication by our leaders that they have not more clearly communicated to borrowers that payments are due again.”

Another issue that could increase delinquency rates is a federal appeals court injunction last month blocking the Biden administration’s student loan forgiveness program known as Saving on a Valuable Education, or SAVE. The plan was aimed at reducing monthly payments for borrowers who had been making their payments for at least a decade.

The income-driven forgiveness plan eliminated monthly payments for those who make less than 225 percent of the federal poverty guideline, or $32,800. The court ruled that the program is very likely to be illegal and the final ruling is expected in the next few months.

On Wednesday, the U.S. Department of Education reopened online applications for the repayment plan and loan consolidation plan for borrowers. It had been temporarily paused to comply with the 8th Circuit Court of Appeals injunction.

While the application process has reopened, it is unclear the plan will survive the final court ruling.