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]

The credit scoring company reported that the average national FICO score has slipped slightly, raising concerns about household resilience amid shifting economic conditions.The overall score has declined by around two points. While modest, the drop reflects broader shifts in consumer creditworthiness. In 2021, nearly 38.1% of the population held scores in the 600–749 range. By 2025, that proportion had fallen to 33.8%, indicating a narrowing of the middle ground between strong and weak borrowers.The most p ...

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]