As Wage Garnishment Looms, Federal Student Loan Borrowers Indicate They Could Prioritize Their Student Loans Ahead of Credit Cards and Personal Loans

Core Insights - A significant number of federal student loan borrowers are facing potential involuntary collections, such as wage garnishment and withholding of tax refunds, due to high delinquency rates [1][5][7] - Borrowers are prioritizing mortgage and auto loan payments over student loans, but in the face of involuntary collections, they are more likely to prioritize student loan payments over credit cards and personal loans [2][3] Delinquency Trends - Serious delinquency rates for federal student loan borrowers have shown a concerning trend, with a notable increase in delinquencies across various credit products from December 2024 to June 2025 [3][4] - The serious delinquency rates for different credit products as of June 2025 are as follows: Mortgage at 5.59%, Auto at 6.30%, Personal Loans at 9.50%, and Credit Cards at 5.96% [4] Borrower Behavior - Nearly half of the federal student loan borrowers who are missing payments cite affordability concerns, while one-third are prioritizing other bills over student loan repayments [5] - As of July 2025, 29.0% of federal student loan borrowers in repayment, equating to 5.4 million individuals, were reported to be 90 or more days past due, indicating a persistent issue with delinquency [6] Future Implications - The ongoing high levels of serious delinquency among federal student loan borrowers may lead to a shift in payment hierarchy, where student loans could take precedence over other debts once involuntary collections begin [7] - Lenders are encouraged to utilize tools like TruVision Premium Student Loan Attributes to better understand the risks associated with federal student loan borrowers in their portfolios [8]