The student debt crisis in the United States is entering a dangerous new chapter, with a record 20.5% of federal borrowers now classified as “seriously delinquent,” according to a new analysis from credit reporting agency TransUnion.

That means roughly 4 million people—one in five with a payment due—are at least 90 days behind on their federal student loans. It's the highest delinquency rate ever recorded for student borrowers in U.S. history, surpassing levels seen even during the global financial crisis and the post-recession years of the early 2010s.

The data arrives as the U.S. Department of Education resumes collecting on federal student loans that have been in default since a Covid-era payment freeze was lifted last year. For millions of Americans, it marks the return of a monthly financial burden that many are simply unable—or unwilling—to bear.

“Some borrowers may not be aware payments have resumed. Others might not have the ability or willingness to pay,” said Michele Raneri, TransUnion’s Vice President of U.S. Research. “Whatever the reason, the numbers are clear: many Americans are financially overstretched.”

The data excludes borrowers still in forbearance or deferment. Among those actively required to pay, the picture is stark. Before the pandemic in February 2020, just 11.5% were in serious delinquency. The previous record was set in 2012, when 15.4% were behind. Today’s figures represent a massive surge.

Credit scores are also taking a hit. Delinquent student loans have shaved off an average of 63 points from affected borrowers’ credit ratings, according to TransUnion. Other research from the New York Federal Reserve suggests subprime borrowers may lose nearly 90 points—while those with previously top-tier credit can see their scores drop by over 170 points.

These changes could make it far harder—and more expensive—for millions of Americans to secure housing, loans, or even employment in a system where credit scores often function as gatekeepers to opportunity.

One borrower, 29-year-old Tyler Wickord of Southern California, shared his experience of financial strain.

“It feels like I’m drowning,” he said. Wickord owes $12,000 in student debt and, despite being on an income-driven repayment plan, has taken on a second job just to stay afloat in San Diego County—one of the most expensive places to live in the U.S.

“Rent is ridiculous,” he added. “You expect the debt, but not how long it will haunt you. Sometimes it feels like they set kids up to fail—giving massive loans to 18-year-olds with no financial education.”

According to TransUnion, more than 41.9 million Americans currently carry student loan debt, with 39.7 million holding federal loans. Around 20 million are still in forbearance or deferment, but the nearly 20 million who are now due to pay are the ones showing the sharpest signs of distress.

Among subprime borrowers—those with the weakest credit—over half (50.8%) are seriously delinquent. In stark contrast, just 0.9% of “super prime” borrowers are behind, laying bare a deeply unequal debt burden that disproportionately affects lower-income and financially vulnerable groups.

With the cost of living still high and wages stagnating for many, the reactivation of federal student loan payments may have long-term economic consequences not just for individuals, but for the broader U.S. economy.

As the U.S. government renews collection efforts, experts warn that borrowers may face tough decisions—sacrificing essentials like food, housing, or healthcare just to keep up with loan payments.

At its heart, this crisis is not only about missed payments—it’s about the cracks in an education financing system that continues to weigh heavily on younger generations, long after graduation.



By WafricNews Desk.