Federal student loan borrowers are under intense financial strain as serious delinquencies remain near record levels, and many are preparing to reshuffle their bill-paying priorities as the Department of Education resumes involuntary collections like wage garnishment and tax refund offsets, according to data released yesterday by TransUnion.
By the numbers:
- In July 2025, 29% of federal student loan borrowers in repayment, about 5.4 million people, were at least 90 days delinquent, according to TransUnion.
- That’s slightly down from April’s peak of 31%, but still the fifth consecutive month with more than five million borrowers seriously delinquent.
- Among delinquent student loan borrowers, delinquency growth rates for other credit products between December 2024 and June 2025 show the strain:
- Mortgages: +20%
- Auto loans: +67%
- Personal loans: +186%
- Credit cards: +479%
Why it matters: Student loans are typically at the bottom of the payment hierarchy. But TransUnion’s survey shows borrowers may push them higher—above credit cards and personal loans—when facing garnishment or refund seizures. Mortgage and auto loans remain top priorities.
What they’re saying: “While the percentage of federal student loan borrowers who are seriously delinquent has slightly subsided in recent months, it continues to remain decidedly elevated,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.
Joshua Turnbull, senior vice president at TransUnion, added that nearly half of delinquent borrowers say they simply cannot afford payments, while one-third are forced to prioritize other bills like rent and utilities first.
The bigger picture:
- During the pandemic payment pause, many households took on additional credit to cover rising costs. Resuming student loan payments has compounded the pressure.
- Confusion also plays a role. Nearly a quarter of delinquent borrowers say they are waiting for clarity on repayment or forgiveness programs.
What’s next: If delinquent borrowers reach 270 days past due, they will be in default and subject to involuntary collections. That could force a dramatic shift in repayment priorities as households seek to protect wages and tax refunds.
Between the lines:
