Student loan delinquency rates highest in 21 years as COVID moratorium fades away

The Federal Reserve Bank of New York recently released a report highlighting a significant increase in delinquent student loans following the end of a moratorium on student loan repayment and the resumption of reporting delinquencies to credit agencies. The New York Fed’s Center for Microeconomic Data found that the number of student loans transitioning into serious delinquency rose sharply in the second quarter.

During the pandemic era, missed federal student loan payments were not reported to credit bureaus from the second quarter of 2020 to the fourth quarter of 2024. With the resumption of reporting, delinquency rates have seen a notable rise. In the second quarter of 2025, a total of 10.2% of aggregate student loan debt was 90 or more days delinquent, slightly below pre-pandemic levels.

The total outstanding student loan debt reached $1.64 trillion in the second quarter of 2025, increasing by $7 billion in the quarter. Additionally, the share of student loan debt entering serious delinquency, considered 90 days or more late, rose to 12.9% at the end of June.

Among different age groups, borrowers 50 and older had the highest transition rate into serious delinquency at roughly 18%. Borrowers in the 40 to 49 age range followed at nearly 14%, while those between 30 and 39 were slightly over 11%. The youngest borrowers, aged 18-29, had the lowest rate of transitioning into serious delinquency at just over 8%.

The report also highlighted an increase in credit card debt by $27 billion in the second quarter, reaching $1.21 trillion, and auto loan borrowing rose by $13 billion to $1.66 trillion. The rise in auto-related borrowing was attributed to an uptick in car purchases to avoid tariff-related price increases.

Matt Schulz, a LendingTree chief consumer finance analyst, noted that despite economic uncertainty, Americans seem to be holding steady. While debt and delinquencies have seen a slight increase, the impact of the federal repayment restart on student loans continues to be substantial.

In conclusion, the New York Fed’s report sheds light on the challenges faced by borrowers as delinquent student loans rise and the overall debt landscape evolves. It is crucial for borrowers to stay informed about their financial obligations and seek assistance if needed to navigate through these uncertain times.