US Household Debt Rises Amid Mounting Mortgage and Student Loan Pressures

US household debt continues to rise, driven by increased mortgage and student loan burdens. Despite this, the debt payment-to-disposable personal income ratio remains below the historical average, according to the Bank of America Institute. This indicates that while household debt is increasing, consumers are still managing to keep up with their debt payments.

US household debt has been on a steady upward trajectory, with the latest data showing a significant increase in mortgage and student loan burdens. According to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit, the share of US consumer debt in serious delinquency rose in the second quarter to the highest level since early 2020. This rise is primarily attributed to a record surge in past-due student-loan debt, which reached 12.9% in the April-to-June period, the highest in 21 years of data [2].

Despite this increase, the debt payment-to-disposable personal income ratio remains below the historical average, indicating that consumers are managing to keep up with their debt payments. The Bank of America Institute reports that while household debt is increasing, consumers are still able to make their debt payments [1].

The surge in student loan delinquencies is particularly concerning. The Federal Reserve Bank of New York's report shows that the share of student loan debt entering serious delinquency was 12.9%, the highest in 21 years. This increase suggests that American households are facing increasing financial distress, likely exacerbated by high interest rates and a slowdown in hiring [2].

Additionally, millions of student loan borrowers could face wage garnishment by the end of August, according to a report from credit bureau TransUnion. The report estimates that one million borrowers could reach default status in August, adding to the nearly 2 million accounts previously estimated to default as of July. TransUnion projects another two million could default in September [3].

The Department of Education has announced that it will start collecting payments for defaulted federal student loans on May 5, but the exact timeline for wage garnishments is unclear. The agency expects wage garnishment to begin "later this summer" [3].

While the increase in household debt is a concern, the fact that consumers are still able to manage their debt payments indicates that the economy is relatively stable. However, the rising delinquency rates for student loans and the threat of wage garnishment suggest that there are underlying financial distress issues that need to be addressed.

References:
[1] https://theedgemalaysia.com/node/765445
[2] https://finance.yahoo.com/news/record-surge-past-due-student-150000573.html
[3] https://www.usatoday.com/story/money/2025/08/07/student-loan-wage-garnishment-could-begin-summer/85564473007/