Student Loan Delinquency Rate Skyrockets
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The rates of student loan non payment between April and June climbed sharply, so that 12.9 percent of debt is now subject to "serious delinquency," according to new data released by the Federal Reserve Bank of New York.
Why It Matters
Federal student loan payments were largely suspended starting in March 2020 as part of a pandemic-era pause initiated under the Biden administration. However, those protections have ended under President Donald Trump, and collections have resumed.
What To Know
Federal Reserve Bank of New York's Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit on Wednesday, which found the number of student loans transitioning into serious delinquency, or 90 days past due, rose "sharply" in the second quarter of 2025.
"Transition into early delinquency held steady for nearly all debt types except for student loans," the report reads. "Student loans saw another uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans."
The report found that 10.2 percent of all student loans are now seriously delinquent, up from 8 percent in the first quarter and 0.8 percent for the second quarter of 2024.
The total outstanding student loan debt came to $1.64 trillion in the second quarter of 2025 after rising by $7 billion.
The mark for being in default is 270 days unpaid. Once in default, students face active collection efforts by the federal government.
Stock image/file photo: A shot of two college graduates as they make their way up a stairway and into the morning sunlight.
Stock image/file photo: A shot of two college graduates as they make their way up a stairway and into the morning sunlight.
GETTY
The Department of Education reactivated its collections process in May, warning that borrowers who remain in default without making arrangements risk wage garnishment and a hit to their credit ratings.
"Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education," the department said at the time. "This initiative will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default."
The Department of Education predicted in April that there could be almost 10 million borrowers in "default in a few months."
"When this happens, almost 25 percent of the federal student loan portfolio will be in default," the agency said.
What Are the Consequences Of Not Paying?
"The consequences of not paying student loans back can be quite severe," Adem Selita, co-founder of The Debt Relief Company, told Newsweek. "The Department of Education is not a creditor you want coming after you."
The consequences of not paying off education debts can be far-reaching, including wage garnishment from the federal government and serious damage to your credit score.
"You will also have the negative impact of delinquent payments on your credit report," Selita said. "You'll be marked as late and late payments can stay on your credit report for up to 7 years. This will negatively impact your score as 35 percent of your credit score as derived from your payment history."
What Happens Next
Researchers caution that these figures are likely to worsen. In a briefing with reporters, Fed officials said they expect delinquency rates to continue rising, potentially returning to the levels seen before the coronavirus pandemic.
Between late 2012 and early 2020, the portion of student loans in serious delinquency typically hovered between 10.7 percent and 11.8 percent.
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