Federal student loans are due again. A record percentage of borrowers are seriously delinquent

CNN

05-05-2025

About 4 million, or roughly one in five, federal student loan borrowers with a payment due are seriously delinquent, according to a new analysis published Monday by TransUnion.
Research from the information and insights company suggests that a significant number of Americans with student loan debt are not able to make payments, did not know payments were due or decided not to pay.
The findings come as the Department of Education has vowed to restart collecting federal student loans in default starting Monday following a Covid-era pause.
TransUnion found that as of February, a record 20.5% of student loan borrowers with a payment due are 'seriously delinquent,' which is defined as 90 days or more past due. (The analysis only includes federal student loan borrowers and only those who are not in forbearance or deferment.)
It's a sharp jump from February 2020 — just before the start of the pandemic — when 11.5%, or about 2.6 million, were seriously delinquent.
The previous record was set in September 2012 when 15.4%, or about 3.3 million, borrowers were 90 days or more past due.
The TransUnion analysis did not determine why a growing share of borrowers are behind on student loan debt.
TransUnion cautioned that its finding of one in five student loan borrowers seriously delinquent may actually understate the problem due to the complexity of the issue. The company said that some borrowers appear to be 90 days or more past due but have not yet been reported as seriously delinquent, likely because they are exploring repayment programs and other options.
The Covid-era pause on federal student loan payments ended in September 2023, and borrowers were shielded from the negative effects of a missed payment until October 2024.
Some student loan borrowers 'may be overstretched' and face a 'difficult financial situation,' Michele Raneri, vice president and head of US research and consulting at TransUnion, told CNN.
Indeed, 50.8% of subprime federal borrowers with past-due payments are considered seriously delinquent.
'Borrowers who have not been repaying will likely have to make a number of challenging budgeting decisions,' Raneri said.
Raneri cautioned that while some borrowers may be unable to pay, others may not know payments have resumed or even know how to make the payments. Others, she said, simply may not be willing to pay.
No matter the reason, falling behind on student loan debt is costly.
According to research from the Federal Reserve Bank of New York, new student loan delinquencies have taken a massive bite out of credit scores. Delinquencies have wiped out an average of 87 points for subprime borrowers and 171 points for those with super prime, or excellent, credit scores.
TransUnion found a smaller yet still sizable decline of an average of 63 points from credit scores of federal student loan borrowers who owe money and are delinquent.
'This will likely make it harder to get a mortgage and, if they can, will likely result in less favorable interest rates than they may have found previously,' Raneri said.
In other words, at a time of already-high interest rates, it will be even more expensive to borrow for those who have fallen behind on student loan debt payments.
TransUnion found that roughly 41.9 million people have student loan debt, with the vast majority (39.7 million) owing federal student loans.
Roughly 20 million of those with federal student loan debt have had payments deferred or are in forbearance. That leaves about 19.7 million who have owed money on their federal student loan debt over the past three months.
Borrowers with weaker credit scores are more likely to fall behind on their federal student loan debt, according to TransUnion's findings. The research found that while 50.8% of subprime borrowers are seriously delinquent, just 0.9% of those with super prime credit scores are behind.
Tyler Wickord, a 29-year-old who lives in Southern California, is struggling to pay off his $12,000 in student loan debt.
'It feels like I'm drowning,' Wickord told CNN in a phone interview. 'Knowing I have student loan debt to pay along with rent, credit card debt and other debt is definitely a bit of a scary feeling, like the life preserver will never get to me while I'm in the ocean.'
Wickord is trying to chip away at his student loan debt even though he currently owes nothing because he is in an income-driven repayment plan. Still, he has taken on a second job just to get by in San Diego county, where, he said, 'rent is ridiculous.'
'I voluntarily took on student debt, but it adds up way more than you expect,' Wickord said. 'There are times it almost feels predatory with lenders willing to give kids who are 18 or 19 this big loan that takes forever to pay off.'
CNN's Alicia Wallace contributed to this report.