Following the Resumption of Federal Collection Activities in May, Nearly One in Three Federal Student Loan Borrowers Find Themselves at Risk for Default

New TransUnion analysis finds record number of borrowers 90 or more days past due, with many only weeks away from potentially defaulting

CHICAGO, June 24, 2025 (GLOBE NEWSWIRE) -- Less than two months since the U.S. Department of Education resumed collections activities among defaulted federal student loan borrowers, new research from TransUnion (NYSE: TRU) reveals that the number of consumers delinquent on student loans and at risk for entering default continues to climb. The analysis will be featured in a new TransUnion webinar titled Market Update: Student Loan Repayment Impacts on June 26^th.

The updated analysis found that as of April 2025, the latest month for which data are available, 31.0% of federal student loan borrowers with a payment due are 90 days or more past due (90+ DPD) as reported by their servicer.¹ This represents a sharp increase over the February 2025 figure of 20.5% reported as part of a previous TransUnion analysis in early May. It also stands at nearly triple the 11.7% figure from February 2020, just prior to the start of the pandemic. In addition, borrowers who have been newly reported as delinquent on their student loans have seen significant drops in their credit scores as a result, by an average of 60 points (based on VantageScore® 4.0).

The April 2025 rate of 90+ DPD delinquency represents the highest figure ever recorded. However, it does represent only a modest increase over March 2025’s 30.6% rate, which may indicate that more student loan borrowers are becoming aware of the importance of maintaining on-time payments.

The Percentage of Federal Student Loan Borrowers Reported as 90+ Days Past Due (90+ DPD) Has Increased an Additional 50% since February 2025

Source: TransUnion U.S. Consumer Credit Database

“We continue to see more and more federal student loan borrowers being reported as the 90+ days delinquent, making a larger number of consumers vulnerable to entering default and the start of collections activities,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “That said, based on the relatively small increase between March 2025 and April 2025, it is possible that the figures are close to peaking. We will continue to analyze data in the weeks and months to come to see if that bears out.”

Millions of Delinquent Borrowers May Be Mere Weeks From Defaulting

The 31.0% delinquency figure in April 2025 is largely made up of borrowers who are not yet in default, with only 0.3% of borrowers already in that status. The total is made up of an estimated 5.8 million federal student loan borrowers who have been reported to TransUnion and other credit bureaus as 90+ days past due.

Approximately 180 days following the loan’s first 90+ DPD delinquency reporting, at 270 days past due, the borrower enters default status, where the borrower is subject to collection actions by the U.S. Department of Education. Of the 5.8 million newly delinquent borrowers, it is estimated that nearly one-third, approximately 1.8 million, could reach default status in July 2025. An additional one million of the 5.8 million total are estimated to reach default status in August 2025, followed by two million more in September 2025.

Raneri added that federal student loan borrowers who are at risk should contact their loan servicers as soon as possible to inquire about potential options that may exist to avoid defaulting. “Options may include income-driven repayment or other payment plans specific to their situation. There are also loan rehabilitation programs that may allow those who do default to get out of default status.”

The analysis also found that more than one in five federal student loan borrowers currently reported as 90+ DPD were in prime or above credit risk tiers prior to going delinquent. Following delinquency, fewer than one in 50 were prime and above. In fact, nearly every borrower not already subprime who ultimately fell 90+ DPD on their federal student loans shifted down at least one risk tier, with many, particularly those who were previously in the lowest risk super prime range, falling two or more tiers.

“This underscores the fact that student loan borrowers of any credit risk tier can find themselves falling behind in their payments and at risk for default, even during a time in which we’ve seen most consumers are managing their debt relatively well,” said Joshua Turnbull, senior vice president and head of consumer lending at TransUnion. “It’s important that lenders stay abreast of the true risk of the borrowers in their portfolio through the implementation of student loan-specific insights into regular portfolio reviews.”

To gain additional insights into how student loans are impacting the wallets of their potential customers, lenders can leverage TruVision Premium Student Loan Attributes to see details about student loan types, balances, and payment histories to help identify impacted consumers. To learn more about the upcoming June 26^th webinar, Market Update: Student Loan Repayment Impacts, click here.

¹ The source for data within this press release is the TransUnion U.S. Consumer Credit Database.

About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good^® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world. http://www.transunion.com/business

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