As Federal Collections Activity Resumes, More Than One in Five Federal Student Loan Borrowers With a Payment Due are Seriously Delinquent

Core Insights - The analysis by TransUnion indicates a significant increase in the percentage of federal student loan borrowers at risk of default, surpassing pre-pandemic levels [1][3] Student Loan Payment Resumption - The U.S. Department of Education suspended federal student loan payments in March 2020 and resumed collections in September 2023, with reporting to credit bureaus starting in October 2024 [2] Delinquency Rates - As of February 2025, 20.5% of federal student loan borrowers with a payment due are 90 days or more past due, compared to 11.5% in February 2020, marking the highest delinquency rate recorded [3][4] Risk Tier Analysis - Among risk tiers, 51% of subprime borrowers were 90+ days past due in February 2025, up from 39% in February 2020, while near prime borrowers increased from 9% to 23% [4][5] Credit Score Impact - Consumers who defaulted since the end of the on-ramp saw an average credit score decline of 63 points, with super prime borrowers experiencing the most significant score drops [5][7] Default Impact by Risk Tier - The average credit score change for borrowers who defaulted in January and February 2025 varied by risk tier, with super prime borrowers losing an average of 175 points, while subprime borrowers lost 42 points [7] Lender Response - Lenders are increasingly incorporating student loan-specific insights into portfolio reviews to identify potentially impacted consumers, reflecting the significant risk posed by defaults among low-risk borrowers [7]