What's happened
As of June 2025, nearly one in three federal student loan borrowers are at risk of defaulting on payments, with delinquency rates reaching record highs. Approximately 5.8 million borrowers are 90 days or more past due, raising concerns about financial stability as the government resumes collections after pandemic relief measures ended.
What's behind the headline?
Current Situation
- Nearly 31% of federal student loan borrowers are now 90 days or more past due, a significant increase from 20.5% in February 2025.
- An estimated 1.8 million borrowers could default in July 2025, with additional defaults expected in August and September.
Implications
- Borrowers who default face severe consequences, including wage garnishment and negative impacts on credit scores.
- The average credit score for those delinquent has dropped significantly, affecting their ability to secure loans and housing.
Economic Context
- The resumption of collections comes at a time when many borrowers are already financially strained due to inflation and high interest rates.
- The situation highlights the urgent need for borrowers to seek assistance and develop repayment plans to avoid further financial distress.
What the papers say
According to Ayelet Sheffey from Business Insider UK, the restart of collections has left many borrowers scrambling to avoid default. TransUnion's analysis indicates that the delinquency rate is the highest recorded since tracking began in 2012. The Guardian emphasizes the urgency of the situation, noting that the consequences of default extend beyond financial penalties, impacting credit scores and future borrowing capabilities. Claire Ballentine from Bloomberg reinforces this point, stating that nearly one-third of borrowers are missing payments, which could lead to significant long-term financial repercussions. The Federal Reserve Bank of New York reports alarming drops in credit scores for many borrowers, further complicating their financial situations. Consumer advocates stress the importance of proactive measures for borrowers to mitigate these risks.
How we got here
The U.S. Department of Education paused federal student loan payments in March 2020 due to the pandemic. Although payments resumed in 2023, a grace period extended until October 2024. The Trump administration restarted collections in May 2025, leading to a spike in delinquencies.
Go deeper
- What are the consequences of defaulting on student loans?
- How can borrowers avoid falling behind on payments?
- What assistance is available for struggling borrowers?
Common question
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Why Are Student Loan Delinquencies at a Record High?
As of June 2025, student loan delinquencies have surged to alarming levels, with nearly one-third of federal borrowers falling behind on payments. This situation raises critical questions about the implications for borrowers and the broader economic landscape. Here, we explore the reasons behind this crisis and what it means for those affected.
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Why Are Student Loan Defaults Rising Sharply?
As of April 2025, the landscape of student loan repayment has drastically changed, with nearly one in three federal borrowers at risk of defaulting. This surge in defaults raises critical questions about the financial stability of borrowers and the government's response to this crisis. Below, we explore the reasons behind this alarming trend and what borrowers can do to navigate these challenges.
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Why Are Student Loan Defaults Surging in 2025?
As the U.S. government resumes student loan collections after pandemic relief measures, many borrowers are facing unprecedented challenges. With nearly one in three federal student loan borrowers at risk of default, understanding the reasons behind this surge and exploring potential solutions is crucial for those affected.
More on these topics
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The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
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The United States Department of Education, also referred to as the ED for Education Department, is a Cabinet-level department of the United States government.
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TransUnion is an American consumer credit reporting agency. TransUnion collects and aggregates information on over one billion individual consumers in over thirty countries including "200 million files profiling nearly every credit-active consumer in the
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The Federal Reserve Bank of New York is one of the 12 Federal Reserve Banks of the United States. It is located at 33 Liberty Street, New York, New York.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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Joseph Robinette Biden Jr. is an American politician who is the 46th and current president of the United States. A member of the Democratic Party, he served as the 47th vice president from 2009 to 2017 and represented Delaware in the United States Senate