US EditionStudent loan delinquencies surge back after 5-year pause
- As of February 2025, over one-fifth of individuals with federal student loans had fallen behind on payments by at least 90 days after repayment obligations restarted in September 2023 following a nearly five-year suspension.
- This rise in delinquencies occurred as a result of the pandemic-era moratorium ending, a gradual payment on-ramp completing in late 2024, and the resumption of credit reporting in October 2024.
- The New York Federal Reserve reported that 8.04% of borrowers entered serious delinquency in the first quarter of 2025, with collections restarting on May 5, including wage garnishments and federal benefit seizures for defaulters.
- Credit scores for millions of borrowers have declined sharply due to defaults, with average decreases of 63 points and potential drops up to 171 points, leading to higher interest rates and reduced opportunities for obtaining mortgages and auto loans.
- The surge in delinquencies signals greater financial strain for borrowers requiring lifestyle changes to maintain creditworthiness for major goals like buying homes or vehicles in the near future.
76 Articles
76 Articles
American Opinion: Past due student loans are finally coming due
The student loan program is a case study in government mismanagement. Last month, the Department of Education announced it will resume collecting on defaulted student loans. It hadn’t done so since March 2020. At that point, a pause was understandable. The COVID crisis was unfolding. Shutdown orders were about to grind the economy to a halt, making it difficult for many to repay their loans. But even most triple-maskers will acknowledge that the…
Terry Savage: Grace period on student loan repayment is over
Student loans have been looming in the background for more than five years, ever since payment requirements were suspended during the pandemic. Of the nearly 43 million people who owe money, only about one-third have made regular payments, according to…
Student loan delinquencies surge, sending credit scores plunging for borrowers
A new report from the New York Federal Reserve found that while Americans' credit card debt is falling, an uptick in student loan delinquencies is causing credit scores to decline.The New York Fed's Center for Microeconomic Data released a quarterly report which showed overall household debt rose by $167 billion – with credit card debt declining by $29 billion. The report noted that the pattern of credit card debt declining is a typical seasonal…
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