Posted on 06/27/2025 5:46:42 AM PDT by SeekAndFind
Millions of federal student loan borrowers are just weeks away from default as serious delinquencies surge to record highs after the Trump administration resumed debt collections, economists say.
Nearly one-third (31%) of federal borrowers with a payment due were at least 90 days late in April, according to a new report from TransUnion released on Tuesday, June 24. That's nearly triple the pre-pandemic rate of 11.7% and the highest figure on record.
Just 0.3% of borrowers were in default by April, but with nearly 5.8 million now more than 90 days late, many are on the brink of defaulting. Once they reach 270 days past due, they're officially in default, which means borrowers can have their wages garnished and federal benefits seized.
TransUnion estimates around 1.8 million borrowers will default in July, followed by one million in August and two million more in September.
"We continue to see more and more federal student loan borrowers being reported as the 90+ days delinquent, making a larger number of consumers vulnerable to entering default and the start of collections activities," said Michele Raneri, TransUnion's vice president and head of U.S. research and consulting. "That said, based on the relatively small increase between March 2025 and April 2025, it is possible that the figures are close to peaking. We will continue to analyze data in the weeks and months to come to see if that bears out."
Credit scores are already taking a major hit. Delinquent borrowers saw their scores drop by an average of 60 points, TransUnion said.
Some super prime borrowers fell two or more risk tiers.
"This underscores the fact that student loan borrowers of any credit risk tier can find themselves falling behind in their payments and at risk for default, even during a time in which we've seen most consumers are managing their debt relatively well," said Joshua Turnbull, senior vice president and head of consumer lending at TransUnion. "It's important that lenders stay abreast of the true risk of the borrowers in their portfolio through the implementation of student loan-specific insights into regular portfolio reviews."
The Federal Reserve Bank of New York warned in March that missed payments could sink credit scores by as much as 171 points. In May, the Pew Research Center described an impending "default cliff," putting borrower finances and taxpayer investments in jeopardy.
TransUnion said at-risk borrowers should contact their loan servicers immediately to explore relief programs.
"Options may include income-driven repayment or other payment plans specific to their situation," Raneri said. "There are also loan rehabilitation programs that may allow those who do default to get out of default status."
Collections officially resumed on Monday, May 5. About 195,000 borrowers were sent 30-day warning letters.
The Department of Education said just 38% of borrowers were current on payments as of early May.
To bad, pay your debts deadbeats!
I don’t really know how this stuff works.
Is it true that there was a time period under Biden when loan payments were not mandated? That interest was not accruing? So that if someone with an outstanding balance were to make a payment, it would go 100% to the principal? You could really make progress paying down a loan during such a time. Unless, of course, you wanted to roll the dice and just hope that you might never have to repay the loan that you agreed to pay.
Matt Walsh had a good segment on this and featured a couple of videos of these deadbeats still resisting fulfilling their voluntary agreement. They are the picture of scum.
Better headline: “Personal responsibility resumes now that Daddy is home”
Never-ever take out student loans to pay for an education. It may seem easy and cheap, but you are the collateralized basis of the loans. There may be no tow truck to repossess you, but that's because they already do. Your housing, assets, spouses assets, vehicles, salary, savings, and your soul, are already theirs.
Student loans teach you how to pick cotton on the government plantation.
“loan payments were not mandated?“
They were paused during the coronavirus plandemic.
I am assuming that interest was not accruing during that pause.
And I am assuming that payments COULD have been made during the pause.
An opportunity to make payments toward a temporarily interest-free loan is a great thing. But I bet few people did that.
What about my mortgage? Why should I have to pay it? My credit card bill? My electric bill? Shouldn’t the government [taxpayers] pay them for me?
What’s special about college loans?
In fact why not just go 100% socialist? The government [taxpayers] pays everything. Only problem is that no one would be working any more — why work when everything is paid for?
That scheme would appear to work for a while, until the government has taken all the money that productive people have earned and given it to lazy slobs. Then inflation becomes exponential, and it all collapses into one big mess.
The whole program is an amazingly bad idea. Only congress could create such an abortion.
“One cannot default as a borrower on a student loan. It will not be a discharged debt. It will hound you until its paid, even to the point of death and settling your estate.”
This is all true, and accurate. The problem is that student loans, since the 1980’s have been treated differently than say business loans. You can be bankrupt, and avoid a business loan or credit card loans and you get to keep your house and transportation. You cannot, by any means, escape student loans unless you have an insurance on your loan in case of death. Please understand that everyone right after school would file for bankruptcy to avoid paying them back, so they changed it to follow you for life.
I have advocated that Student Loans, since they can’t be avoided, be at least Tax Deductible in repayment.
I’m sure glad that forty years ago I joined the military for a few years and the military gave me a monthly stipend to attend college with no loans to pay back. I have a family member that is still paying off their loans forty years later.
Explain to me how student loans can’t be avoided? I put three kids through college without a penny of student loans. Of course for twenty years we took no vacations, bought no new cars, fixed what broke, bought clothes at Goodwill, planned and cooked our meals at home, packed our lunches, etc....
In exchange for universal access, low rates, and deferred repayment, they are guaranteed by the string arm of the government. Can you imagine how hard it would be to fund student loans if they were risk based and not government sponsored??!!
Hint....The #1 funding source for student loan capitalization is the Federal Employees Pension and retirement funds. Also unions like AFLCIO, SEIU, NFT, etc...
So you get my drift.
“ Student loans teach you how to pick cotton on the government plantation. ”
Schools will shove those loan docs under your nose in a heartbeat. Particularly secondary private trade schools. Culinary, cosmetology, nursing, etc. are all guilty of this. “Don’t worry about the cost, just sign here.” Young skulls full of mush eagerly sign.
The residents of New York City are about to find out how this all works - plenty of free things promised by “Little Mohammed” Madman, the next mayor of New York - paid for by “the rich” (who actually voted for this idiot).
They will find out all right - the hard way - as the “rich” i.e., the tax base, that “Little Mohammed” is already threatening to heavily tax - flees to no-state-tax Florida.
These Socialists never think of that, of course.
How are you going to pay for Medical school for three kids?
The average person can’t afford to pay for professional school for their children, plus room and board. You have to figure that Medical School will be 75-100k per year just for the school, not to mention all the other things to live.
It’s not realistic, to completely avoid student loans, for professional students. They may, or may not, be able to pay them back quickly depending upon final training, health, and ability to work.
We as a nation are already suffering from ‘insourcing’ professionals, and outsourcing manufacturing. We need to think more ‘American’ and protect that resource. The nation needs to come to terms with the concept of ‘writing them off’ student loans off of taxes. Otherwise people will all be graduates of Foreign schools very shortly.
Each notice ought to include a suggestion: We will slow down re-payment (i.e., stretch it out) if you report for work at _________. These would be jobs recently vacated by deportees.
Just to twist the knife a wee bit more.
I pay my debts. I shouldn’t have to pay for everyone else’s.
That said, now that NGO-NFP money is drying up, business has dropped notably.
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