Soaring student loan delinquency rates reach a 21-year high as COVID-19 repayment freeze diminishes.
The Federal Reserve Bank of New York's Center for Microeconomic Data has reported a significant increase in delinquent student loans following the end of a moratorium on student loan repayment.
Pre-pandemic trends for student loan delinquency were around 9-10% from 2012 into early 2020. However, the share of student loan debt entering serious delinquency (90 days or more late) jumped to 12.9% at the end of June 2025.
The impact of the federal student loan repayment restart has been substantial, according to LendingTree chief consumer finance analyst Matt Schulz. He stated that Americans seem to be holding steady in debt and delinquencies, except for student loans.
The Federal Student Loan Program showed the highest delinquency rates among different age groups in the second quarter of 2025. Borrowers aged 50 and up had the highest rate of transitioning into serious delinquency, at approximately 18%. Borrowers between the ages of 30 and 39 and those in the 40 to 49 age range followed closely with rates of more than 11% and nearly 14%, respectively.
In contrast, the youngest cohort of borrowers in the 18-29 age range had the lowest rate of transitioning into serious delinquency at more than 8%.
During the pandemic era repayment pause, delinquency rates were driven to 2% or lower. However, delinquencies on student loans have risen after the expiration of the repayment pause, contributing to the total amount of outstanding student loan debt, which was $1.64 trillion in the second quarter of 2025.
The total amount of student loan debt rose by $7 billion in the same period, while auto loan borrowing increased $13 billion, reaching $1.66 trillion. Interestingly, some of the rise in auto-related borrowing was due to an uptick in car buying to get ahead of tariff-related price increases.
Reuters contributed to this report, which underscores the growing concern about the financial impact of student loans on borrowers as they resume repayment. The rise in delinquency rates highlights the need for financial education and support for borrowers navigating their student loan repayment.
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