Greg McKenna
3 min read
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Missed student loan payments have driven overall consumer debt delinquency to a post-pandemic high. As the Trump administration reverses lenient Biden-era policies, millions of borrowers have seen their credit scores plunge after delinquencies returned to credit reports in the first quarter of 2025.
The Trump administration is cracking down on student loan repayments, driving the debt burden of American households higher as many borrowers struggle to keep up. After a five-year pause, the government restarted collections on defaulted student loan debt earlier this month, and millions of people have already seen their credit scores plunge after such delinquencies returned to credit reports in the first quarter of 2025.
The overall share of delinquent consumer debt in the U.S. rose to 4.3% in the first three months of the year, according to the Federal Reserve Bank of New York’s quarterly report on household debt and credit. That marked its highest level since 2020 and an increase from 3.6% in the prior quarter.
Even more strikingly, missed payments surged even though new delinquency rates for nearly all loan types held steady, apart from a notable exception. Almost 8% of aggregate student debt was reported in “serious delinquency,” or 90 days past due, compared to less than 1% at the end of last year.
View this interactive chart on Fortune.com
“After a five-year hiatus, student loan delinquency has returned to the pre-pandemic ‘normal’ with more than [10%] of balances and roughly six million borrowers either past due or in default,” the New York Fed wrote in a blog post Tuesday. “The ramifications of student loan delinquency are severe.”
The new administration’s actions reflect a stark change in approach from the government under Biden, which tried to forgive tens of millions of borrowers of roughly $400 billion in federal student loan debt, only for the Supreme Court to strike down the plan.
Now, the New York Fed estimates more than nine million borrowers could face major financial repercussions as collections resume, with the White House saying the government could dip into federal tax refunds, Social Security benefits, federal pensions, and wages of delinquent borrowers.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” U.S. Secretary of Education Linda McMahon said in a press release last month. “The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear.”
