Rising Student Loan Delinquency Rates

Panelists Caroline Downey and Cage Sawyer recently discussed a troubling trend: student loan delinquencies are reaching new highs, while many current and future college students are doubting whether their degrees will justify the costs.

This Tuesday, the Federal Reserve Bank of New York highlighted the increase in delinquent student loans as repayments resumed following a suspension period. With the release of its quarterly report, the New York Fed’s Center for Microeconomic Data pointed out a notable rise in the number of student loans moving into serious delinquency during the second quarter.

Between the second quarter of 2020 and the fourth quarter of 2024, missed payments on federal student loans weren’t reported to credit bureaus, but that changed recently, causing delinquency rates to rise again. The New York Fed found that 10.2% of total student loan obligations were over 90 days past due in the second quarter of 2025.

Total unpaid student loan debt hit $1.64 trillion, climbing by $7 billion from the previous quarter. Moreover, the proportion of obligations classified as seriously delinquent, meaning they were over 90 days late, rose to 12.9% by the end of June, up from 8% in March. Before the pandemic, this rate was typically around 9-10% from 2012 until early 2020.

Interestingly, the rate of serious delinquency was highest among borrowers over the age of 50, nearing 18%. For those between 40 and 49 years old, it was nearly 14%, while borrowers aged 30 to 39 stood at just over 11%. The youngest group, ages 18 to 29, had the lowest transition rate to severe delinquency, which was around 8% or a bit more.

A federal report from New York also noted an increase in credit card debt, which rose by $27 billion to reach $1.21 trillion in the same quarter, alongside an additional $13 billion increase in auto loan borrowing, totaling $1.66 trillion. Much of this uptick in auto loans was reportedly linked to buying cars ahead of anticipated tariff-related price increases, according to bank researchers.

“Amid economic uncertainty, Americans seem to be managing,” said Matt Schultz, chief consumer finance analyst at a lending institution. “Debts and late payments are slightly up, but overall, it tends to look like a typical second quarter for student loans. The renewed federal repayments are definitely having a noticeable impact.”