Overview

• Federal collections on defaulted student loans resumed on May 5, 2025, ending pandemic-era relief measures initiated in 2020.
• Nearly 8% of student loan debt is now 90 days past due, a sharp increase from less than 1% in the previous quarter, according to the New York Fed.
• Over 5.3 million borrowers are in default, and another 4 million are in late-stage delinquency, with one in four active borrowers behind on payments.
• Enforcement measures, including wage garnishment and Treasury offsets, are reducing disposable income by an estimated $3.1 to $8.5 billion monthly.
• Experts warn that reduced disposable income could lead to higher delinquencies on other consumer debts, such as credit cards and auto loans.