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Student Loan Delinquencies Surge as Collections Resume

Millions of borrowers face steep credit score declines and wage garnishments as federal collections restart after a five-year pause.

The Federal Reserve building is seen in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts/File Photo
Social Security Administration logo, taken at a office branch in April 2022.
Nearly one in four student-loan borrowers are behind on their payments.
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Overview

  • The student loan delinquency rate rose sharply to 7.74% in Q1 2025, marking a return to pre-pandemic levels after a five-year reporting pause ended.
  • Over 5 million borrowers are in default, with the Department of Education resuming wage garnishments, tax refund seizures, and Social Security offsets as of May 5, 2025.
  • Millions of borrowers have experienced significant credit score declines, with some seeing drops of over 150 points, limiting access to credit and increasing borrowing costs.
  • Seven southern states, led by Mississippi at 44.6%, report conditional student loan delinquency rates exceeding 30%, highlighting regional disparities in repayment challenges.
  • Despite rising student loan delinquencies, credit card and auto loan delinquency rates have remained stable, reflecting broader household debt trends.