An alarming estimate suggests over 9.7 million borrowers are now past due on their student loan payments, with this unpaid debt bound to have severe consequences on credit scores and financial freedom.
See the tweet below!
Approximately 9.7 million student loan borrowers became past due after the COVID-19 pandemic payment pause ended in September 2023.
The Federal Reserve Bank of New York suggests this delinquency may exceed pre-pandemic levels.
A new report by the New York Fed estimates that delinquent federal student loans have reached 15.6%, totaling over $250 billion.
The Biden administration attempted to cushion the blow with a 12-month “on-ramp” to repayment, protecting borrowers from most consequences of missed payments until September 30, 2024.
However, the grace period is now over, and the impact on credit scores and financial stability looms large.
A student loan delinquency can drop a borrower’s credit score by over 150 points. More than 9 million borrowers may see their FICO scores take a substantial hit in the coming months.
“More than 9 million Americans could see ‘substantial declines’ in their FICO scores in the coming months as delinquent student loans begin showing up on credit reports for the first time since the pandemic, according to a new analysis by the Federal Reserve Bank of New York,” reports Yahoo Finance.
Despite the Biden administration’s introduction of the Fresh Start program only about 900,000 people have participated so far.
Recent graduates now grappling with repayment for the first time are at increased risk of default.
Court battles over income-driven repayment plans have complicated matters, adding layers of uncertainty.
Adding to this chaos, the student loan program’s move from the Department of Education to the Small Business Administration introduces further instability.
Meanwhile, the Trump administration is expected to restart involuntary collections on defaulted loans.
Over 9 million student loan borrowers past due after bills restarted, Fed estimates https://t.co/dKU8LXW7f5 pic.twitter.com/RwYZyLmvpK
— The Last Word (@TheLastWord) March 26, 2025
As the situation develops, millions will await clarity on the ballooning student loan crisis.
“According to these numbers, it is reasonable to expect student loan delinquency to surpass pre-pandemic levels when new delinquencies hit credit reports,” reads the Fed’s report.
This complex web of policy changes and financial jeopardy emphasizes the dire need for a balanced approach to handling student loans without compromising the lender or the borrower’s financial future.
Conservative governance advocates for upholding accountability while ensuring American financial freedom isn’t unjustly compromised by government overreach.
