Student Loan Delinquency Rate Soars As DOE Begins Collections

college graduate students
Via Wikimedia
Adé Hennis
May 28, 2025

On Monday, May 5, the Department of Education resumed collecting payments for student loan borrowers in default. The Department estimates that over five million borrowers haven’t made a payment on their loan in the past 360 days.

Collections on defaulted loans can include garnishment of wages, tax refunds, and federal benefits such as disability payments. The DOE plans to notify nearly 200,000 defaulted borrowers that collections could soon begin. Millions of other borrowers are at risk of default.

Credit bureau TransUnion reported a 20.5% delinquency rate among borrowers, the highest ever recorded. But the bureau expects the actual percentage to be even higher.

Late payments on loans can reduce a credit score TransUnion estimated that credit scores decreased on an average by 63 points for borrowers who made late payments.

Michele Raneri, Vice President of TransUnion, stated, "Borrowers can review their credit report to see what loan servicers are reporting. This can also help people find who to contact if they have a loan they didn't expect to see."

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