Delinquency Rates Rise
The end of the pandemic-era pause on student loan payments has led to a significant increase in delinquency rates, with 8% of student debt falling into serious delinquency in Q1 2025, up from less than 1% a year earlier.
Overall, the share of U.S. consumer debt in delinquency reached 4.3% in the first quarter of 2025, the highest level since 2020, indicating a broader trend of rising delinquency rates across various debt types.
Impact on Borrowers and Economy
The spike in student loan delinquencies has severely affected borrowers' credit standings, with millions facing increased borrowing costs or limited access to credit, such as mortgages and auto loans.
Despite the surge in student loan delinquencies, the overall state of household balance sheets remains solid, with credit card and auto loan balances declining, suggesting a mixed but cautiously optimistic outlook for consumers.