US Student Loans Surge to 21-Year High, Household Debt Hits $18.39 Trillion

US student loan delinquencies surged to a 21-year high, with a 12.88% share of loans entering serious delinquency (90+ days past due). Student loan balances rose $7 billion to $1.64 trillion in Q2, while total household debt climbed $185 billion to $18.39 trillion. High interest rates and a cooling job market may exacerbate financial stress. Cutting waste from spending is crucial to improving finances.

US student loan delinquencies have surged to a 21-year high, according to the Federal Reserve Bank of New York. In the second quarter of 2025, 12.88% of student loans entered serious delinquency, defined as being 90+ days past due. This marks the highest delinquency rate since data tracking began in 2004.

The surge in delinquencies is attributed to the expiration of a years-long relief period for borrowers. In March 2020, Congress passed a massive COVID-19 relief package that allowed borrowers to pause payments on federal student loans without penalty, reduced interest rates to 0%, and stopped reporting missed payments to credit bureaus. This period was extended several times, but interest rates resumed in September 2023, and payments restarted in October of that year. The "on-ramp" period, during which missed payments did not damage credit scores, ended last fall, leading to an increase in delinquencies [1].

The increase in delinquencies is not limited to fresh graduates. The New York Fed noted that the average age of a delinquent borrower was just over 40 in May 2025. Joshua Turnbull, senior vice president and head of consumer lending at TransUnion, attributed the increase to prime and super-prime borrowers facing "confusion, budgeting inexperience, or a belief that further relief may be coming" [1].

The rise in delinquencies coincides with a $7 billion increase in student loan balances to $1.64 trillion in Q2 2025. Total household debt climbed by $185 billion to $18.39 trillion during the same period. High interest rates and a cooling job market may exacerbate financial stress for borrowers. Cutting waste from spending is crucial to improving finances [1].

References:
[1] https://finance.yahoo.com/news/student-loan-delinquencies-are-on-the-rise-heres-why-184802465.html