Roughly one million federal student loan borrowers slid into default in late 2025, according to data released last week by the Federal Reserve Bank of New York, as total household debt climbed to $18.8 trillion. The latest Quarterly Report on Household Debt and Credit shows that nearly 10% of student loan balances are now more than 90 days past due, even as overall household debt rose by $191 billion in the fourth quarter of 2025. For banks, agencies, fintechs, and collection law firms, the data points to mounting pressure within the student loan portfolio at the same time consumer balance sheets are carrying higher overall leverage.
The report shows student loan balances reached $1.66 trillion at the end of 2025, up $11 billion quarter over quarter. About one million borrowers who were more than 120 days past due had their loans transferred to the Department of Education’s Default Resolution Group during the quarter. The student loan delinquency rate remained elevated, with 9.6% of balances classified as 90 days or more past due. Researchers noted that transitions into delinquency were more pronounced for student loans than for other major credit products.
At the same time, overall household leverage continued to rise. Mortgage balances grew by $98 billion in the fourth quarter to $13.17 trillion, while credit card balances increased by $44 billion to $1.28 trillion. Auto loan balances edged higher to $1.67 trillion, and HELOC balances increased to $434 billion. In aggregate, 4.8% of all outstanding household debt was in some stage of delinquency at the end of 2025, up from the prior quarter.
Mortgage performance remains relatively stable by historical standards, though early stage delinquencies ticked up and foreclosure starts increased modestly. The credit quality of newly originated mortgages held steady, with a median credit score of 775 for new originations in the fourth quarter. By contrast, the data shows student loans as the primary area of credit deterioration, reflecting the resumption of payment reporting following the pandemic forbearance period.
For industry participants, the report highlights a credit environment where overall balances are expanding, underwriting on mortgages remains tight, and delinquency risk is becoming more concentrated in student loan portfolios. The combination of rising household debt and elevated student loan distress suggests that credit stress is increasingly segmented by product type, with student lending emerging as a focal point of late 2025 consumer risk trends.
