Rising Student Loan Delinquencies and Increased Household Debt

Recent data indicates that delinquent student loan borrowers are accumulating more non-education debt than prior to the COVID-19 pandemic, highlighting a growing financial strain. As of August 2025, approximately 6 million Americans, or nearly 16% of student loan borrowers, were at least 60 days past due or in default, a figure comparable to pre-pandemic levels. However, the financial landscape for these borrowers has shifted significantly, with many now carrying additional debts such as auto loans and mortgages.

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An analysis by the Urban Institute reveals that among those behind on student loans, the percentage with auto loans rose from 30% pre-pandemic to 38% in 2025, while those with mortgages nearly doubled from 8% to 15%. Furthermore, the share of borrowers in delinquency who possess credit cards surged from 39% in 2019 to 64% in 2025. This increase in debt is attributed to pandemic-era policies that temporarily alleviated financial burdens but inadvertently encouraged borrowers to take on additional loans rather than pay down existing debts.

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The suspension of federal student loan payments, initiated by President Donald Trump in March 2020 and extended by President Joe Biden, provided significant financial relief, allowing borrowers to save an average of $280 per month. However, the subsequent resumption of payments in October 2023, coupled with a year-long on-ramp that shielded missed payments from credit reports, has led to confusion and anxiety among borrowers. The Biden administration's proposed debt cancellation plan, which was later struck down by the Supreme Court, further complicated borrowers' understanding of their obligations.

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Critics argue that the shifting federal policies have left borrowers feeling manipulated and uncertain about their financial futures. Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, noted that many borrowers are struggling to manage their payments as living costs rise. The recent end of the Biden-era Saving on a Valuable Education plan, which allowed low-income borrowers to pay as little as $0, has exacerbated these challenges.

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The financial strain from student loans is impacting borrowers' ability to achieve major life milestones. Surveys indicate that many are delaying home purchases, starting families, and saving for retirement due to their debt burdens. For instance, Tonya Escobar, a psychiatric nurse practitioner, expressed that her substantial student debt limits her financial flexibility and quality of life.

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While some reports indicate a general recovery in consumer spending and debt repayments, others highlight the increasing delinquency rates among new credit accounts opened during the pandemic. This discrepancy suggests a complex and evolving financial landscape for borrowers, with varying experiences based on individual circumstances.

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• “and it makes it harder for them to pay for other obligations they have.” — Breno Braga, Senior Fellow, Urban Institute

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• “the expectations folks had was they were not supposed to pay the student loan back,” — Breno Braga, Senior Fellow, Urban Institute

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• “I would have a higher quality of life if [my student debt] weren't around me. It's very choking,” — Tonya Escobar, Psychiatric Nurse Practitioner

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As the landscape of student loan repayment continues to evolve, borrowers face significant challenges in managing their debts alongside rising living costs and shifting federal policies.

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