Student Loan Delinquencies Surge as Payments Resume Post-Pandemic/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ A record 20.5% of federal student loan borrowers with active payment obligations are seriously delinquent, according to new data from TransUnion. As federal collections resume after a pandemic-era pause, millions are behind on payments—raising concerns over financial strain, credit damage, and long-term economic impact.
Student Loan Delinquency Crisis: Quick Looks
- 20.5% Seriously Delinquent: Nearly 4 million federal borrowers are 90+ days late on payments.
- Sharp Rise Since 2020: Up from 11.5% delinquent before the pandemic began.
- Collections Resume: The Department of Education restarts loan collection efforts this week.
- Subprime Borrowers Hit Hardest: Over 50% of subprime borrowers are seriously delinquent.
- Credit Scores Dropping: Delinquencies slashing credit scores by up to 171 points.
- Widespread Confusion: Many borrowers unaware payments have resumed.
- Default Consequences: Difficulty securing loans, higher interest rates, long-term financial damage.
- 40+ Million in Debt: Most of the 41.9 million student loan borrowers owe federal loans.
- Hardship Stories Emerging: Borrowers like Tyler Wickord face mounting financial pressure.
- Predatory Lending Concerns: Critics question the ease with which young borrowers incur large debts.
Student Loan Delinquencies Surge as Payments Resume Post-Pandemic
Deep Look
The long-dreaded resumption of federal student loan payments has triggered a wave of financial strain across the United States, with new data revealing a record number of borrowers now seriously delinquent. According to a report published Monday by credit insights firm TransUnion, 20.5% of student loan borrowers with active payment obligations are 90 or more days past due — translating to roughly 4 million Americans.
This marks a historic high, surpassing even the previous peak in 2012, and represents nearly double the delinquency rate seen in February 2020, before the pandemic-era pause on payments began.
The Department of Education is now resuming collections on defaulted loans, following a gradual phase-out of relief that began in September 2023 and officially ended for most borrowers by October 2024. Since then, the financial fallout has become increasingly visible.
“The reality is, many borrowers are overwhelmed,” said Michele Raneri, vice president at TransUnion. “They’re being forced to make tough financial decisions—especially those with subprime credit.”
Indeed, the analysis found that more than half of subprime borrowers (50.8%) are now in serious delinquency. In contrast, just 0.9% of super-prime borrowers, those with excellent credit, are behind on their payments.
Yet TransUnion warned the numbers may understate the crisis, noting that some borrowers who appear to be 90 days past due may not yet be officially classified as such due to administrative lags or ongoing enrollment in new repayment programs.
The consequences of delinquency are substantial. According to the Federal Reserve Bank of New York, falling behind on student loan payments has caused credit scores to plunge — by an average of 87 points for subprime borrowers and a staggering 171 points for those with super prime credit. TransUnion’s data shows an average credit score drop of 63 points for borrowers who are late on their payments.
“This type of credit damage makes it harder for people to buy a home or even qualify for a car loan,” Raneri explained. “And when they can borrow, it’ll be at much higher rates.”
The resumption of loan payments comes as many Americans are already struggling with rising living costs, credit card debt, and stagnant wages. For many, student loans are yet another financial burden in a system they feel is stacked against them.
Tyler Wickord, a 29-year-old from Southern California, knows this pressure all too well. Even though he’s enrolled in an income-driven repayment plan and technically owes nothing at the moment, he’s taken on a second job just to stay afloat in San Diego County, where the cost of living is among the highest in the country.
“It feels like I’m drowning,” Wickord said in an interview. “It’s a scary feeling knowing you’re carrying this debt on top of rent, credit cards, and everything else. It feels like that life preserver’s never going to reach you.”
Wickord, who owes $12,000 in federal student loans, says he doesn’t regret investing in his education, but questions the system that made it so easy to take on debt as a teenager.
“There are times it almost feels predatory,” he said. “You’re 18, maybe 19, and they’re handing you thousands of dollars you’ll be paying off for decades.”
As of early 2025, roughly 41.9 million Americans carry student loan debt, with 39.7 million owing federal loans. About 20 million of those are currently in forbearance or deferment, leaving 19.7 million actively responsible for making payments in the past three months.
While the Biden and Trump administrations have introduced repayment relief programs, millions remain confused or unaware of when and how to resume payments. And as TransUnion notes, some may be unwilling to pay—whether out of protest, financial exhaustion, or uncertainty about the system’s fairness.
Regardless of the reason, defaulting on student loans comes at a steep cost, both financially and emotionally. And with interest rates already elevated, borrowers behind on payments now face the added burden of borrowing at worse terms if they need a loan to weather economic challenges ahead.
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