CHICAGO — 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, according to TransUnion.
“The Department of Education (DOE) initially suspended federal student loan payments in March 2020,” noted TransUnion. “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 Findings
According to TransUnion, the analysis found that 20.5% of 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 company said.
It added the current rate of delinquency represents the highest figure ever recorded.
“Student loans and their payment reporting are complex,” VP-Research Michele Raneri said in a statement. “More than one in five student loan borrowers with a payment due have been reported as seriously delinquent, but this figure may in fact be much higher. 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.”
Subprime Leads
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, TransUnion reported, adding that near prime followed at 23% in February 2025 (up from 9% in February 2020).
“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,” the company said. “And while a lower percentage of super prime borrowers were seriously delinquent, those who did ultimately default saw the impact to 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,” it added.
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.
‘Shocked by Impact’
“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,” Joshua Trumbull, senior vice president and head of consumer lending at TransUnion, said in a statement. “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.”
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