As Federal Collections Activity Resumes, More Than One in Five Federal Student Loan Borrowers With a Payment Due are Seriously Delinquent
New TransUnion analysis explores the percentage of student loan borrowers at risk of default and the credit score impacts
CHICAGO, May 05, 2025 (GLOBE NEWSWIRE) -- As the U.S. Department of Education begins resuming collections activities among defaulted borrowers, new research reveals that the number of consumers at risk for default has soared past pre-pandemic levels. These findings come from a new analysis conducted by TransUnion (NYSE: TRU) and featured at the company’s 2025 Financial Services Summit, attended by 300+ leading industry executives.
The Department of Education (DOE) initially suspended federal student loan payments in March 2020. The agency called for payments to resume in September 2023, with servicers directed not to report them to credit bureaus until October 2024, with the requirement that borrowers only be reported to credit bureaus as delinquent when they reach 90 days or more past due on federal student loan accounts. Last month, the DOE announced it would resume collection activities effective today.
The analysis found that 20.5% of federal student loan borrowers with a payment due are 90 days or more past due (90+ DPD) as reported by their servicer through February 2025. This compares to 11.5% in February 2020, near the beginning of the pandemic and the subsequent student loan pause. The current rate of delinquency represents the highest figure ever recorded.
More Consumers are 90+ Days Past Due (90+ DPD) Than Just Prior to the Pandemic
| February 2020 | February 2025 | |
| Total | 11.5% | 20.5% |
Source: TransUnion U.S. Consumer Credit Database
"Student loans and their payment reporting are complex. More than one in five federal student loan borrowers with a payment due have been reported as seriously delinquent, but this figure may in fact be much higher," said Michele Raneri, vice president and head of research at TransUnion. "The complexity arises in part from the various reasons borrowers might not be making payments without being considered delinquent, such as being a current student or in deferment or forbearance. We are continuing to analyze data to determine how many non-payers are at risk of being reported as seriously delinquent or default."
Across risk tiers, subprime saw the highest percentage of payment-due student loan borrowers seriously delinquent in February 2025, with 51% at 90+ DPD, up from 39% in February 2020. Near prime followed at 23% in February 2025 (up from 9% in February 2020).
More Than Half of Subprime Federal Student Loan Borrowers With a Payment Due Were 90+ DPD
| February 2020 | February 2025 | |
| Super prime | 0.1% | 0.9% |
| Prime plus | 0.1% | 2.1% |
| Prime | 1.3% | 7.5% |
| Near prime | 9.1% | 23.3% |
| Subprime | 38.8% | 50.8% |
Source: TransUnion U.S. Consumer Credit Database
The analysis also found that those consumers who had faced default since the end of the on-ramp saw their credit scores decline by an average of 63 points. And while a lower percentage of super prime borrowers were seriously delinquent, those who did ultimately default saw the impact on their credit scores to be significantly greater than that of traditionally more risky credit tiers. This is largely due to the fact that borrowers in higher credit risk tiers typically have fewer derogatory marks, so an account in default has the potential to have a significant and jarring impact.
Among those borrowers who experienced a default in the months of January and February 2025, 23% were in prime and above risk tiers in December 2024.
Consumers in the Super Prime Credit Tier Were the Most Impacted by Student Loan Default
| Risk Tier Prior to Default | Average Credit Score* Change |
| Super prime | -175 pts |
| Prime plus | -121 pts |
| Prime | -99 pts |
| Near prime | -64 pts |
| Subprime | -42 pts |
*VantageScore® 4.0
"Consumers may find themselves shocked by the dramatic and immediate impact that a default can have on their credit scores. Likewise, lenders need to recognize the significant potential impact on otherwise low-risk borrowers," said Joshua Trumbull, senior vice president and head of consumer lending at TransUnion. “That need to identify potentially impacted consumers and the associated risk is creating a surge in lenders incorporating student loan-specific insights into portfolio reviews and doing those reviews more often.”
To gain additional insights into how student loans are impacting the wallets of their potential customers, lenders can leverage to see details about student loan types, balances, and payment histories to help identify impacted consumers. Consumers seeking more information about how can read our consumer blog on the topic.
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.
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| TransUnion | |
| Telephone | 312-972-6646 |
