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The Guardian
11 hours ago
- Business
- The Guardian
‘It would destroy me': fear of student loan default haunts US borrowers
When David* logs into the online portal for his federal student loans, he sees some big numbers staring back at him: he owes more than $27,000 in his own name, plus about $63,000 in loans that are co-signed with his father but that he pays off himself. 'It's sort of an inconceivable amount to think about paying off anytime soon,' says David, a 26-year-old in Seattle who graduated as a political science major in 2021, and now works for a non-profit. 'You almost never see yourself paying it off.' The worst part for David is that, next to information about his debts, it says in large red letters: 'PAST DUE.' David says right now repayments of about $500 a month are needed for his loan debts, which 'feels crushing' after rent and utilities of about $1,500 a month in Seattle. He missed loan repayments for the month of June. About 5.8 million federal student loan borrowers – roughly 31% – were 90 days or more past due on their payments as of April 2025, according to analysis from TransUnion, as delinquency and default rates soar in the wake of pandemic-era repayment relief ending. US federal student loan debt is worth almost $1.7tn, with 42.7 million people owing some form of federal loan debt. And in May, the Trump administration resumed collecting on defaulted student loans after a five-year pause started during the pandemic. About 1.8 million borrowers are at risk of falling into default – which occurs once they are 270 days past due – making them subject to wage garnishment and other collection actions by the Department of Education, and having a ruinous impact on people's credit scores. While the $27,000 loans in David's name are currently in forbearance, it is those co-signed by his father that are not – and past due. He says when he missed a payment it caused friction in their relationship. 'My dad's credit score dropped by like 50 points,' David says. 'It's difficult to navigate that. He was angry.' Michael James, a 26-year-old in Sioux City, Iowa, studied at Iowa State University and then the University of South Dakota. But, before graduating, he was forced to stop full-time studying and take on full-time work for financial reasons. Five years on from leaving his studies unfinished, James owes almost $18,500 in federal student loan debt. Even though his loan is currently in forbearance – which means he's not paying anything towards it, but interest keeps climbing – he's 'immensely' worried about defaulting. 'A default would absolutely destroy me for the next 10 years of my life, there's no amount of hard-working that's going to remove a default from a credit file,' he says. Barbara, a 62-year-old in Auburn, Maine, has found that even paying hundreds of dollars a month for more than two decades hasn't stopped the debt hanging over her due to eye-watering interest. Barbara borrowed about $60,000 in federal student loans for a master's program in psychiatric nursing at New York University, graduating in 2001. She paid off at least $66,000 over 20 years, but due to interest, she still owes nearly $61,700, according to documents shared with the Guardian. Barbara said her husband would like to retire, and she's trying to put money towards retirement, too, but the debt is stopping her. One of her loans even has an estimated repayment year of 2054. 'I'll be 91,' she says. Federal student loans cannot typically be discharged in bankruptcy court, unlike other forms of loan, which Barbara and other borrowers want to see changed. Barbara says she's currently putting two kids through college and trying, as far as possible, to help them do it without federal student loans. 'I don't want them to get caught with that noose around their necks,' she says. Over the Fourth of July weekend, Sean Redmond's wife and children – an eight-year-old son and three-year-old twins – traveled from their home in Perkasie, Pennsylvania, to upstate New York to see family. But Redmond, 46, stayed behind, working overtime at his job in pharmaceutical manufacturing. He has federal student loan debt of $61,696, and after a period of forbearance which ends on 30 August, he'll need to pay $806 a month. 'I know I have the ability to get extra hours to get the money to pay it, it's just more of an annoyance, a hassle,' Redmond says. It means more evenings and weekends sacrificed to working overtime, less time spent with his family. 'I had hopes for Trump when he got elected and he talked about dismantling the Department of Education and stuff,' Redmond says. He thought this might have meant federal student loans being able to be canceled on the same terms as other loans in bankruptcy court. But Redmond found it 'disappointing' that the Trump administration later said what remains of the department will continue to govern student debt. Peter is a 31-year-old museum worker in Washington state. After graduating with a fine arts degree in 2016, he has nearly $22,000 to repay in federal loans. He says education in the US is 'unnecessarily expensive', and that even with the relative security of full-time work, it's a financial struggle as 'the cost of living is becoming more and more extreme'. Peter is not currently at risk of default, because he's implemented an income-driven repayment plan. But he said the idea of paying off the loans seems far-fetched. It's 'a very important thing for our society' to have people working in the arts, he said, 'and I push back on the idea that, 'Well, you should have just got a degree in something else' – that minimizes the value of the arts'. Peter, however, says he can't imagine a future in which he's free from debt: 'It's like a staple of American life, that you're in debt in some way, shape or form.' *Some names changed
CNET
a day ago
- Business
- CNET
Freezing Your Credit Is Free. Join Me in Taking This Important Cybersecurity Step
Viva Tung/CNET As a personal finance editor covering identity theft, I knew freezing my credit would make it harder for cybercriminals to open a new account in my name. But I still went back and forth on freezing my credit before I actually did it because it also adds a few extra steps for me to do the same. When you freeze your credit, you have to manually unfreeze or "thaw" it with Experian, TransUnion and Equifax whenever you want to apply for a new credit card, mortgage or car loan. The process of freezing your credit isn't straightforward either. It involves signing up for individual accounts with each credit bureau and freezing your credit manually online, by phone or by mail. Online is the fastest option. But there are two benefits that ultimately sold me on it. First, freezing your credit is absolutely free. And second, I get peace of mind in knowing I've neutralized a major tool in identity thieves' playbook. Why I froze my credit reports Data breaches happen more often than you think, across multiple industry sectors. And chances are, your data has been compromised at least once. Last year, Ticketmaster and AT&T reported data breaches that affected millions of customers. And hacks of background search company National Public Data and UnitedHealth Group subsidiary Change Healthcare also compromised the personal data of hundreds of millions of people. But if you're worried about new credit accounts being opened in your name, a credit freeze can help. I've noticed an uptick in the number of scam messages I receive on my phone and in my email inbox over the past year. Most are easy enough to sniff out, but some were fairly well researched. I've received a variety of messages asking me out for ribs and even offering me new job opportunities. The barrage of messages, phone calls and emails makes me think that at any given moment -- while distracted or in a rush to get back to my desk for my next meeting -- I may fall victim to a scam that could lead to identity theft. Freezing my credit is one of the best ways to protect your data and money, but it's not foolproof. Fraudsters and identity thieves might still gain access to my personal information via existing accounts. I can limit the damage, however. Read more: 5 Signs Your Personal Data Is on the Dark Web, and What You Can Do About It How I froze my credit with TransUnion, Equifax and Experian When you freeze your credit, you'll need to do it with each of the three main credit bureaus. That requires setting up accounts with each -- a process that took about 30 minutes online. Generally, you're asked for the same information: your name, birthday and the last four digits of your Social Security number. You then need to complete two-factor authentication via text or email. TransUnion and Equifax have dedicated tabs on your dashboard for freezing your credit after you create an account. With a few clicks, I was all set. Experian makes this option a bit more difficult to find. After some clicking around, I found two ways to activate a free security freeze. You can hover over "credit" on your dashboard and click Experian Credit Lock -- Experian's paid offering that works similar to a credit freeze but locks your credit report instantly, among other features. On that page, you'll see the free "security freeze" option. Experian/Screenshot by /CNET You can also scroll down to the bottom of the page while signed in and click Experian Credit Lock to get to the same page. All three credit bureaus will confirm your credit freeze via email. If you don't want to set up online accounts, you can call each credit bureau to freeze your credit. Here are the numbers for each: TransUnion: 800-916-8800 Equifax: 888-298-0045 Experian: 888-397-3742 After you've requested a credit freeze, each bureau must freeze your credit within one business day. When you need to unfreeze your credit, Experian, TransUnion and Equifax are required to thaw your credit within an hour. By mail, it may take up to three business days to freeze and unfreeze your credit. Freezing your credit won't solve all of your identity theft worries Setting up the credit freeze was simple enough. But I'm not going to tell you that having your credit frozen is convenient. Here are some downsides to consider. You'll have to unfreeze your credit every time you open a new account Freezing your credit prevents cybercriminals or identity thieves from opening new credit accounts in your name. But it also stops you. To open a new credit account, you'll need to log into your accounts or contact each of the three credit bureaus and temporarily unfreeze your credit. If you're thinking of applying for a new credit card, looking for your first home or thinking of taking out a new car loan, it's probably best to wait until after you've opened the account before freezing your credit. False sense of security Freezing your credit is a good step toward protecting your identity, but it can still be stolen. You may consider signing up for an identity theft protection service. Individual plans typically start from $7 to $15 depending on the level of financial and identity monitoring you want. With an identity theft protection plan, you can monitor your credit, bank accounts and the dark web for your or your family's personal identifiable data, or PII. Alternatively, you can take advantage of free tools at your disposal. Review your monthly credit card and bank statements. Also look at your medical claims history online and on your credit report. You can download your free credit report on It won't stop spam messages If scammers have your phone number or email, you won't be able to stop attempts to scam you out of money in your existing accounts. It's best to block telephone numbers and email addresses from unrecognized senders every time you receive a strange message. Also, take a minute to read messages carefully before clicking on a link. It won't put an end to new credit offers Freezing your credit also won't eliminate the spam mail and prescreened offers you receive. Credit freezes are meant to prevent hard inquiries on your credit, such as lease applications or applying for a student loan. You can still expect to receive offers from credit card companies, insurance carriers and more. Financial institutions you already have a relationship with and debt collectors can also view your credit. Under special circumstances, so can the federal, state and local government. Credit monitoring companies like Credit Karma and Credit Sesame can still provide you with your up-to-date credit scores. You'll still need good password hygiene Even if your credit is frozen, you'll still need to make sure you have good passwords. Be sure not to use the same login information across multiple sites -- using the same login is a common tactic by cybercriminals. If keeping track of your passwords becomes overwhelming, consider paying for a password manager. CNET recommends Bitwarden. It won't protect your bank account information Even if you freeze your credit, it's still your responsibility to protect your bank account information from scammers. If you mistakenly provide any account numbers or login information to cybercriminals, contact your bank immediately and change your password. In the end, I'm glad I froze my credit There are pros and cons to freezing your credit. But with no plans to open a new account anytime soon, it was worth it to me. I also feel safer after doing it. It's nice to know I have thrown a wrench into any cybercriminal's plans. Sure, the spam messages keep rolling in. But I'm fine with being the gatekeeper of my financial accounts. I make a habit of checking my bank and credit card statements regularly. More credit advice
The Guardian
a day ago
- Business
- The Guardian
‘It would destroy me': fear of student loan default haunts US borrowers
When David* logs into the online portal for his federal student loans, he sees some big numbers staring back at him: he owes more than $27,000 in his own name, plus about $63,000 in loans that are co-signed with his father but that he pays off himself. 'It's sort of an inconceivable amount to think about paying off anytime soon,' says David, a 26-year-old in Seattle who graduated as a political science major in 2021, and now works for a non-profit. 'You almost never see yourself paying it off.' The worst part for David is that, next to information about his debts, it says in large red letters: 'PAST DUE.' David says right now repayments of about $500 a month are needed for his loan debts, which 'feels crushing' after rent and utilities of about $1,500 a month in Seattle. He missed loan repayments for the month of June. About 5.8 million federal student loan borrowers – roughly 31% – were 90 days or more past due on their payments as of April 2025, according to analysis from TransUnion, as delinquency and default rates soar in the wake of pandemic-era repayment relief ending. US federal student loan debt is worth almost $1.7tn, with 42.7 million people owing some form of federal loan debt. And in May, the Trump administration resumed collecting on defaulted student loans after a five-year pause started during the pandemic. About 1.8 million borrowers are at risk of falling into default – which occurs once they are 270 days past due – making them subject to wage garnishment and other collection actions by the Department of Education, and having a ruinous impact on people's credit scores. While the $27,000 loans in David's name are currently in forbearance, it is those co-signed by his father that are not – and past due. He says when he missed a payment it caused friction in their relationship. 'My dad's credit score dropped by like 50 points,' David says. 'It's difficult to navigate that. He was angry.' Michael James, a 26-year-old in Sioux City, Iowa, studied at Iowa State University and then the University of South Dakota. But, before graduating, he was forced to stop full-time studying and take on full-time work for financial reasons. Five years on from leaving his studies unfinished, James owes almost $18,500 in federal student loan debt. Even though his loan is currently in forbearance – which means he's not paying anything towards it, but interest keeps climbing – he's 'immensely' worried about defaulting. 'A default would absolutely destroy me for the next 10 years of my life, there's no amount of hard-working that's going to remove a default from a credit file,' he says. Barbara, a 62-year-old in Auburn, Maine, has found that even paying hundreds of dollars a month for more than two decades hasn't stopped the debt hanging over her due to eye-watering interest. Barbara borrowed about $60,000 in federal student loans for a master's program in psychiatric nursing at New York University, graduating in 2001. She paid off at least $66,000 over 20 years, but due to interest, she still owes nearly $61,700, according to documents shared with the Guardian. Barbara said her husband would like to retire, and she's trying to put money towards retirement, too, but the debt is stopping her. One of her loans even has an estimated repayment year of 2054. 'I'll be 91,' she says. Federal student loans cannot typically be discharged in bankruptcy court, unlike other forms of loan, which Barbara and other borrowers want to see changed. Barbara says she's currently putting two kids through college and trying, as far as possible, to help them do it without federal student loans. 'I don't want them to get caught with that noose around their necks,' she says. Over the Fourth of July weekend, Sean Redmond's wife and children – an eight-year-old son and three-year-old twins – traveled from their home in Perkasie, Pennsylvania, to upstate New York to see family. But Redmond, 46, stayed behind, working overtime at his job in pharmaceutical manufacturing. He has federal student loan debt of $61,696, and after a period of forbearance which ends on 30 August, he'll need to pay $806 a month. 'I know I have the ability to get extra hours to get the money to pay it, it's just more of an annoyance, a hassle,' Redmond says. It means more evenings and weekends sacrificed to working overtime, less time spent with his family. 'I had hopes for Trump when he got elected and he talked about dismantling the Department of Education and stuff,' Redmond says. He thought this might have meant federal student loans being able to be canceled on the same terms as other loans in bankruptcy court. But Redmond found it 'disappointing' that the Trump administration later said what remains of the department will continue to govern student debt. Peter is a 31-year-old museum worker in Washington state. After graduating with a fine arts degree in 2016, he has nearly $22,000 to repay in federal loans. He says education in the US is 'unnecessarily expensive', and that even with the relative security of full-time work, it's a financial struggle as 'the cost of living is becoming more and more extreme'. Peter is not currently at risk of default, because he's implemented an income-driven repayment plan. But he said the idea of paying off the loans seems far-fetched. It's 'a very important thing for our society' to have people working in the arts, he said, 'and I push back on the idea that, 'Well, you should have just got a degree in something else' – that minimizes the value of the arts'. Peter, however, says he can't imagine a future in which he's free from debt: 'It's like a staple of American life, that you're in debt in some way, shape or form.' *Some names changed
IOL News
a day ago
- Business
- IOL News
Rising debt: calls for greater consumer vigilance
The National Financial Ombud Scheme South Africa (NFO) is concerned about high levels of debt exposure in the wake of the release of TransUnion's Q1 2025 Industry Insights Report, which confirms a troubling trend: credit products commonly used by lower- and middle-income consumers are experiencing rapid growth in both uptake and default rates. Image: File With the dramatic shifting of credit from a tool for upward mobility to a survival mechanism for necessities like food, rent, electricity and transport, alarm bells are being sounded about unsustainable debt levels of consumers. The National Financial Ombud Scheme South Africa (NFO) is concerned about high levels of debt exposure in the wake of the release of TransUnion's Q1 2025 Industry Insights Report, which confirms a troubling trend: credit products commonly used by lower- and middle-income consumers are experiencing rapid growth in both uptake and default rates. With many households relying on credit just to meet basic needs, the NFO has warned of a surge in retail and non-bank loan defaults and urges consumers to beware of reckless lending, which can only place them deeper in debt. FINANCIAL STRAIN According to TransUnion, which explores financial trends in South Africa, non-bank personal loans now reflect the highest rate of serious delinquency in over three years, with 41.3% of account holders falling three months or more into arrears. This represents a sharp 520 basis point year-on-year increase and outpaces the default rate for bank personal loans by over 15%. The statistics for other retail credit products are equally concerning for the NFO. Default rates now stand at 27.1% for retail instalment accounts, 25.9% for clothing accounts, and 14.9% for retail revolving credit. The TransUnion report shows that while more consumers are taking up loans, retail instalment credit is up 16%, clothing credit 7.6%, and revolving credit 5.4%. The simultaneous rise in missed repayments signals growing financial strain on households. Kwanda Vabaza, Manager - Adjudication at the NFO's Banking and Credit Division, said: 'These figures are not just statistics. They reflect the reality of households using credit to survive rather than to grow. When nearly half of all non-bank loan holders are behind on their payments, the system is under serious strain. KNOW YOUR CREDIT RIGHTS 'Many consumers remain unaware of their rights under the National Credit Act (NCA), particularly when it comes to reckless lending.' The Banking and Credit Division of the NFO, led by Nerosha Maseti, has jurisdiction on non-bank credit disputes, covering credit agreements such as store and furniture accounts, microloans, non-bank credit cards, non-bank vehicle finance, non-bank home loans and other forms of credit not issued by banks. Vabaza said: 'We continue to see cases where credit was granted to consumers who clearly could not afford the repayments. This is classified as reckless lending and is prohibited by the NCA. In such instances, consumers are entitled to relief, which may include restructured terms or, in extreme cases, a recommendation by the NFO for the cancellation of the debt. 'The NFO also frequently receives complaints relating to clothing accounts, furniture and appliance credit, store cards, and non-bank personal loans. ''These disputes typically involve issues such as prescription (legally expired debt), incorrect balances, credit bureau listing disputes, fraud, and affordability assessments that were either not conducted or done improperly, leaving consumers burdened with unsustainable debt. 'Consumers have the right to receive credit only when it is affordable and in their best interests. They are also entitled to clear explanations of the total cost and legal consequences of any credit agreement they enter into.' Fortunately, for those who must contend with credit woes, they need not suffer in silence when things go wrong - the NFO is ready to help consumers with their challenges, ensuring financial fairness, transparency and justice in credit-related matters. The NFO offers free alternate dispute resolution, thus protecting and empowering credit-active consumers. 'Where rights are violated, consumers should contact our office. Our services are free and impartial, and we aim to resolve disputes in a way that is fair to both the credit provider and the consumer,' said Vabaza. CREDIT APPLICATION TIPS The NFO encourages all consumers to keep the following tips in mind when using or applying for credit: Only borrow what you can afford to repay, and do not misrepresent your affordability prospects. Before accepting any credit, check your income and monthly expenses to make sure you can manage the repayments comfortably. Avoid using credit for day-to-day expenses: Relying on credit to buy food, fuel, or airtime can quickly lead to debt spirals. Credit should be used wisely, not for survival. Understand all the terms and costs: Ask for a Pre-Agreement Statement and Quotation, which contains a full breakdown of interest rates, monthly repayments, and total costs before signing a credit agreement. Know your rights under the National Credit Act (NCA): You are entitled to fair treatment, proper affordability checks, and clear communication from any credit provider. If these are not followed, you may have a valid complaint. Pay on time and keep track of your accounts: Set up reminders or debit orders to ensure you never miss a payment. Keep a record of all your credit agreements and statements to avoid surprises 'If you are struggling or believe your credit agreement may not have been fair, contact the NFO. We are here to help ensure accountability and to protect your rights as a credit consumer,' Vabaza concluded. The National Financial Ombud Scheme of South Africa
Globe and Mail
3 days ago
- Business
- Globe and Mail
TransUnion (TRU) Receives a Buy from J.P. Morgan
In a report released today, Andrew Steinerman from J.P. Morgan maintained a Buy rating on TransUnion, with a price target of $118.00. The company's shares opened today at $98.12. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Steinerman covers the Industrials sector, focusing on stocks such as Cintas, First Advantage, and BrightView Holdings. According to TipRanks, Steinerman has an average return of 11.4% and a 70.52% success rate on recommended stocks. The word on The Street in general, suggests a Moderate Buy analyst consensus rating for TransUnion with a $112.92 average price target, representing a 15.08% upside. In a report released today, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a $110.00 price target. Based on TransUnion's latest earnings release for the quarter ending June 30, the company reported a quarterly revenue of $1.14 billion and a net profit of $287.8 million. In comparison, last year the company earned a revenue of $1.04 billion and had a net profit of $85 million
