Record-breaking delinquency in student loans re-emerges as the COVID moratorium winds down.
In the second quarter of 2025, the resumption of student loan repayments following a moratorium implemented at the onset of the COVID-19 pandemic has led to a significant increase in delinquencies.
President Donald Trump initially started the repayment pause, a policy that President Joe Biden continued throughout much of his term. However, the end of this moratorium has had a notable impact on the repayment status of student loans.
The Federal Reserve Bank of New York reported a rise in the number of delinquent student loans after the end of the repayment moratorium. The total amount of outstanding student loan debt stood at $1.64 trillion in the second quarter of 2025, marking a $7 billion increase from the previous quarter.
The share of student loan debt entering serious delinquency (90 days or more late) jumped to 12.9% at the end of June 2025, according to the New York Fed's Center for Microeconomic Data. This figure is above pre-pandemic levels, which were around 9-10%.
The transition into serious delinquency was highest among borrowers aged 50 and up, at approximately 18%. Borrowers in the 40 to 49 age range had a serious delinquency rate of nearly 14%, while those between the ages of 30 and 39 had a rate of more than 11%. In contrast, the youngest cohort of borrowers in the 18-29 age range had the lowest rate of transitioning into serious delinquency at more than 8%.
The rise in delinquencies on student loans has been substantial, according to Matt Schulz, a LendingTree chief consumer finance analyst. However, Americans seem to be holding steady overall.
Other forms of borrowing also saw an increase in the second quarter of 2025. Credit card debt rose by $27 billion to $1.21 trillion, while auto loan borrowing rose $13 billion to $1.66 trillion. Some of the rise in auto-related borrowing was tied to an uptick in car buying to get ahead of tariff-related price increases.
The Biden administration extended the repayment pause as it unsuccessfully attempted to cancel student loan debt through executive actions. The resumption of reporting delinquencies to credit agencies has also contributed to the rise in delinquency rates.
Despite these challenges, it is essential to note that specific data on the number of students aged at least 50 who are in serious payment arrears recorded in the second quarter of 2025 are not available.
As the nation continues to navigate the economic impact of the COVID-19 pandemic, the rise in student loan delinquencies serves as a reminder of the ongoing financial strain faced by many Americans. It is crucial for policymakers and financial institutions to address these issues and provide support to those in need.
