The first few months of this year saw a notable rise in student loan delinquencies, following the end of a period during which late payments were not reported, according to the New York Federal Reserve’s quarterly household debt analysis.
This year, serious delinquency—characterized by failure to make a payment for 90 days or more—in federal student loans climbed to almost 8%, a steep increase from less than 1% in the same quarter last year when reporting was suspended for five years.
The latest figures on student loans have contributed to a surge in the overall late consumer debt rate, reaching its highest point in five years.
“The rates of serious delinquency for credit cards and auto loans have stabilized over the past year,” noted Daniel Mangram, a research economist at the New York Fed. “However, the first reporting of legitimate student loan delinquencies in early 2025 led to a notable increase in seriously overdue borrowers,” he mentioned in a news release.
Borrowers who are late on payments will see this new information reflected on their credit reports and may encounter collections actions.
The delinquency rate for student loans had dropped to below 1% after the federal government halted repayment and monitoring of student loan delinquencies in 2020 during the peak of the COVID-19 pandemic.
After federal repayments resumed in the latter part of 2023, borrowers were given a one-year grace period to ease them back into payments, shielding them from certain penalties. Analysts from the New York Fed indicated that this year’s delinquencies are beginning to show up in credit reports.
“Among the borrowers who were asked to pay, nearly one in four (23.7%) was behind in the first quarter of 2025,” they observed.
The Fed’s analysis revealed that delinquency rates for student loans were highest in the South, while northeastern states generally had lower rates.
In seven states, student loan delinquency rates exceeded 30%. Mississippi topped the list at 44.6%, followed by Alabama (34.1%), West Virginia (34.0%), Kentucky (33.6%), Oklahoma (33.6%), Arkansas (33.5%), and Louisiana (31.8%).
Conversely, only five states—Illinois (13.7%), Massachusetts (14.0%), Connecticut (14.5%), Vermont (14.7%), and New Hampshire (14.8%)—reported rates below 15%.
