Student loan delinquencies hit record high, FICO report says

Core Insights - Borrowers are experiencing unprecedented levels of delinquency on student loan payments, leading to significant declines in credit scores [1][2][3] Delinquency Rates - Over 10% of consumers with student loans have not made a payment in over 90 days, with 3.1% of these borrowers (6.1 million consumers) reporting delinquencies from February to April [1][2] - The delinquency rate increased by 25% from 7.9% in April of the previous year to 9.8% in April of this year [2] Impact on Credit Scores - The average credit score for the 6.1 million consumers with delinquencies dropped by 69 points, falling below 600 [3] - Approximately 25% of these borrowers experienced a drop of more than 100 points in their credit scores [3] Payment Behavior - An additional 1.9 million consumers have not made any payments since October but have seen their credit scores rise by an average of 2 points [4] - In contrast, 12.9 million borrowers who made at least one payment since October saw a decline of 1 point in their credit scores [4] Demographic Insights - Generation Z has experienced the largest year-over-year drop in credit scores, with 34% of this group holding student loans, which is double the rate of the overall population [5] Regulatory Context - The impact of unpaid student loan payments on credit reports is being felt for the first time since the CARES Act allowed for a pause in payments until October 2023 [6] - Federal student loan delinquencies began appearing on credit reports in February due to a 90-day delay in reporting after payments are past due [7]