Debt shifts: Credit cards, auto loans cool while student loans heat up
(NewsNation) — Americans pumped the brakes on credit card and car debt to start the year, but with missed student loan payments now showing up on credit reports, new data reveals a fresh financial headache is already setting in.
Total household debt rose by $167 billion to $18.2 trillion in the first quarter — a jump driven by mortgage debt, according to the latest quarterly report from the Federal Reserve Bank of New York. Credit card balances dropped by $29 billion and auto loan debt fell by $13 billion from the previous quarter.
Meanwhile, student loan balances hit a record $1.63 trillion, and now that past-due loans are hitting credit reports for the first time in five years, delinquencies are spiking.
In the first quarter of 2025, about 8% of student loan debt fell into serious delinquency, meaning 90 days or more past due. That's up from less than 1% a year earlier but roughly in line with the pre-pandemic norm.
A new era for student loans begins with garnished wages on the table
A New York Fed analysis of borrowers, rather than balances, found that nearly a quarter (23.7%) of borrowers who were required to make payments were behind on their student loans.
Missed payments are already dragging down the credit scores of millions of Americans, driving up borrowing costs and making it harder to get approved for loans.
According to the New York Fed, more than 2.2 million student loan borrowers who became newly delinquent saw their credit scores drop more than 100 points and more than one million saw drops of at least 150 points.
The highest rates of student loan delinquency were in southern states, led by Mississippi and Alabama.
Earlier this month, the Education Department resumed involuntary collections, which means borrowers in default could face garnished tax refunds and reduced Social Security payments.
Credit card debt tends to dip after the holidays as consumers pull back on spending, so the latest drop is likely seasonal, not a sign that Americans have tackled their underlying debt issues.
'Don't be fooled by the modest decrease,' Ted Rossman, Bankrate's senior industry analyst, said in a statement. 'Credit card balances and interest rates remain near record highs, and Americans' total consumer debt load is a record $18.2 trillion.'
Perhaps more concerning: The share of credit card debt that is 90 or more days delinquent climbed to 12.3% in the first quarter, the highest level since 2011.
Rossman pointed out that credit card balances are 54% higher than they were four years ago and auto loan balances have risen by 19%.
Is there a car loan bubble? Here's what to know
Americans now owe $1.64 trillion in auto loans, making it the second-largest category of consumer debt after mortgages. Rising delinquencies and elevated interest rates have sparked concerns about an auto loan bubble, but the New York Fed's latest analysis suggests the situation remains under control.
Transition rates into serious delinquency have 'leveled off' for auto loans over the past year, Daniel Mangrum, research economist at the New York Fed, said in a release.
The first quarter decline in auto loan balances marked only the second time since 2011 that they've dropped from the previous quarter.
However, it remains to be seen whether the tariff-driven car buying surge will push up auto debt in the second quarter.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Newsweek
24 minutes ago
- Newsweek
Donald Trump's Net Approval Positive on Only One Key Issue
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. President Donald Trump's net approval rating is negative on a range of issues except immigration, a new poll shows. According to political analyst and statistician Nate Silver, writing in his Silver Bulletin Substack, Trump has a net negative approval rating on trade, the economy and inflation but a slightly positive rating on immigration. Why It Matters Taking the temperature of the nation, approval ratings are good measures of the public's response to Trump's policies and his actions as president. In the first few months of his second term, Trump's popularity has fluctuated, with some polls more favorable than others. Sustained backlash to his policies could persuade the president to change his approach. Trump, who made immigration a central part of his campaign, has vowed to crack down on border security, carry out mass deportations and end federal benefits for people residing in the country illegally. President Donald Trump speaking with reporters in the rain after arriving on Air Force One at Joint Base Andrews in Maryland on May 30. President Donald Trump speaking with reporters in the rain after arriving on Air Force One at Joint Base Andrews in Maryland on May 30. AP Photo/Julia Demaree Nikhinson What To Know Silver aggregated dozens of recent polls and found that Trump's approval rating on immigration was +2.5 percent. The president did not fare as well on other issues, with a -9.5 percent approval rating on trade, -11.3 percent on the economy and -17.5 percent on inflation. May polling conducted by Verasight U.S. for Strength in Numbers found similar results, with Americans disapproving of the president's handling of all the policy areas they were asked about except border security. That poll also found that 49 percent disapproved of his immigration policy, while 47 percent approved. Overall, Silver found that when analyzing the polls, Trump had a -5.4 net approval rating. An RMG Research/Napolitan News poll, conducted between May 14 and 21 among 3,000 registered voters, showed Trump's approval rating at 48 percent, with 50 percent disapproving. The poll had a margin of error of plus or minus 1.8 percentage points. Other polls have found a more positive response to the president. According to a recent Rasmussen survey, 53 percent of respondents said they approved of Trump, while 46 percent said they disapproved. What People Are Saying Scott Lucas, a professor in international politics at University College Dublin, previously cautioned against reading too much into any one poll, telling Newsweek: "Opinion polls have their own biases." President Donald Trump wrote on Truth Social on April 20: "We are, together, going to make America bigger, better, stronger, wealthier, healthier, and more religious, than it has ever been before!!!" What Happens Next The midterm elections, scheduled for November 2026, may offer a clearer indication of voters' attitudes toward the president's policies.
Newsweek
34 minutes ago
- Newsweek
IRS Tax Refund Timeline: June 2025 Schedule
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Millions of Americans are anticipating their 2025 federal tax refunds, and throughout June the Internal Revenue Service (IRS) will be reviewing and handing out payments via direct deposits and mailed checks. Why It Matters Despite budget constraints and potential processing delays, most taxpayers who filed in May should receive their refunds in June—particularly if they filed electronically and opted for direct deposit. The IRS began processing refunds after the April tax deadline. With an average refund hovering around $2,950, this annual injection of funds can be significant for many households. However, the actual arrival date of a refund depends heavily on how and when the return was submitted. When Will Tax Refunds Arrive? The IRS has laid out specific refund timelines depending on the filing date and method. Taxpayers who submitted returns electronically with the option of direct deposit between May 1 and May 15 can expect their refunds to arrive from May 22 up to June 4. If those returns were filed electronically but opted for a mailed check, refunds were expected to arrive between May 29 and June 11. For paper filers in this window, refunds may arrive as late as July 10. Those who filed between May 16 and May 31 can anticipate their refunds between June 6 and June 19 for direct deposits, June 13 and June 26 for mailed checks, and July 11 to July 25 for paper filings. The IRS encourages all taxpayers to use its Where's My Refund? online portal to track their payment status. This tool provides updates on whether a return has been received, approved, or sent. File photo of the Internal Revenue Service headquarters in Washington D.C. File photo of the Internal Revenue Service headquarters in Washington D.C. J. David Ake/AP How Much is the Average Refund? The average refund amount for 2025 is approximately $2,939. That figure is slightly higher than last year's average amount of $2,869, though individual refunds vary based on earnings, withholding, tax credits, and deductions. Those eligible for refunds are generally taxpayers who overpaid their 2024 tax liabilities. It represents the excess amount withheld or paid during the year compared to what was owed. However, errors in tax filings, missing documents, or incomplete forms can delay processing. The IRS's reduced staffing and budget are also contributing to longer wait times—especially for paper returns, which require manual review. The IRS recommends that taxpayers ensure all documents are complete, accurate, and that direct deposit information is correct to minimize delays. Tracking and Delays The filing method continues to be a major factor in refund speed. E-filing with direct deposit is the fastest method and is typically processed within 21 days, barring issues. Meanwhile, paper filers must account for potential delays of several additional weeks, particularly if their return requires manual correction or verification. Taxpayers with questions about their refund status or experiencing a delay beyond the standard processing window are advised to use the IRS's online tracking tool or contact the IRS directly if the refund has not arrived after 21 days from e-filing, or six weeks from mailing a paper return. As a reminder, the IRS began accepting individual returns in January, and the deadline for most taxpayers was April 15, 2025. Those who filed for an extension have until October 15, 2025, to submit their returns, though payment was still due by the April deadline. With these expectations in place, many Americans should see their 2025 refunds arrive before the end of June, provided all submission details were in order.
Newsweek
an hour ago
- Newsweek
Social Security Benefits: Payment Worth Up to $5,108 Due This Week
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Another round of Social Security payments is scheduled to be made this week for beneficiaries across the country. Why It Matters The Social Security Administration pays retirement, disability and survivor benefits to more than 70 million Americans, forming a bedrock of income for those who are retired, disabled or the survivor of a deceased worker. Payments are administered on a monthly basis and paid in one lump sum for most recipients. Because of the large number of recipients, not every claimant receives their payment on the same date each month. Benefits Paid This Week On Tuesday, June 3, benefit payments are scheduled to be made to those who have been collecting checks since before May 1997 and those who also collect Supplemental Security Income benefits. Anyone who doesn't receive their payment on the expected date should allow three working days before contacting Social Security. Saturdays, Sundays and public holidays are not working days. A stock image of a Social Security card with U.S. dollars. A stock image of a Social Security card with U.S. dollars. GETTY How Much Is Social Security? The average Social Security retirement benefit is $1,976 per month as of January 2025, but the beneficiary's lifetime earnings and years spent paying Social Security taxes determine the actual amount. Up to $2,831 can be earned each month by retiring at age 62, and up to $4,018 can be earned by claiming at full retirement age, which is 67. The upper limit increases to $5,108 for those who wait until they are 70. Benefits increase in line with inflation every year thanks to the Cost of Living Adjustment (COLA). The definitive answer for how much benefits will rise next year is not set in stone and is expected to be officially announced in October. Based on current economic conditions, the Senior Citizens League (TSCL) forecasts the COLA for 2026 to be 2.4 percent, which is slightly lower than the 2.5 percent annual boost for benefits in 2025. It would also be the lowest annual increase since 2021. High inflation during the coronavirus pandemic led to considerably higher-than-average COLAs of 5.9 percent in 2022 and 8.7 percent in 2023. "If our predictions come true and the 2026 COLA comes in at the lowest we've seen since 2021, seniors will face additional pressure at a time when they're already strained financially," TSCL executive director Shannon Benton said last month in a prediction update. "Our research shows that 73 percent of American seniors rely on Social Security for at least half their income, with 39 percent depending on the program for all of their income." Further Payment Dates In June, benefits are scheduled to be paid on the following dates:
