Over 20 Million Americans Are Behind on Student Loans: As of May 2025, over 20 million Americans are behind on student loan payments, signaling a deepening crisis that could significantly impact the U.S. economy. With total student debt surpassing $1.6 trillion, the resumption of loan repayments after a pandemic-induced pause has led to a surge in delinquencies and defaults.
Over 20 Million Americans Are Behind on Student Loans
The student loan crisis is a multifaceted issue impacting millions of Americans and the broader economy. Understanding the implications and exploring available resources can help borrowers navigate this challenging landscape.
| Metric | Data |
|---|---|
| Total Student Debt | $1.63 trillion as of Q1 2025. |
| Borrowers in Default | Over 5 million borrowers have not made a monthly payment in over 360 days and sit in default. |
| Delinquency Rate | Surged from below 1% to nearly 8% after the pause on reporting delinquent federal student loans ended. |
| Credit Score Impact | Credit scores dropped over 100 points for 2.2 million borrowers, with more than 1 million losing 150 points or more. |
| Economic Growth Impact | Economists estimate student loan payments may reduce GDP by 0.1% in 2025 as disposable income shrinks. (wsj.com) |
| Resumption of Collections | Federal student debt collections resumed on May 5, 2025, including involuntary collections such as wage garnishment and withholding tax refunds. |
| Borrowers in Late-Stage Delinquency | 4 million borrowers are in late-stage delinquency (91–180 days past due). |
| Credit Score Decline Consequences | Substantial drops in credit scores will have long-lasting ramifications, including lower credit limits, higher interest rates for new loans, and limited access to credit in general. |
Understanding Why Over 20 Million Americans Are Behind on Student Loans
The Financial Strain on Borrowers
The end of the pandemic-era pause on student loan payments has led to a significant financial strain on borrowers. Many are experiencing substantial drops in their credit scores due to missed or delinquent payments. During the payment hiatus, borrowers in default saw an average credit score increase of 103 points, but as missed payments are now reflected again, over 9 million may see their scores decline.
Impact on Consumer Spending and Economic Growth
The burden of student debt is curtailing consumer spending, a key driver of the U.S. economy. Many borrowers are delaying major life decisions: 51% of renting student borrowers have postponed home purchases, 31% have delayed buying cars, and 22% have put off starting businesses. Economists estimate that resumed student loan payments could reduce GDP by 0.1% in 2025, as disposable income shrinks and financial stress mounts.
Credit Markets and Financial Stability
Alarmingly, even borrowers with strong credit histories are falling behind. In February 2025, 20.5% of 19.6 million student loans were over 90 days delinquent, surpassing previous highs. Nearly a quarter of these delinquents had prime or better credit scores, indicating financial stress among typically reliable borrowers. This trend is raising concerns among lenders and could lead to tighter credit conditions, further constraining economic activity.
Older Borrowers and Retirement Challenges
The crisis is not limited to young adults. Older borrowers, including those nearing retirement, are grappling with substantial student debt. For instance, a 63-year-old man with a six-figure student loan balance is facing wage garnishment due to inability to make monthly payments of $1,414. Such scenarios underscore the long-term financial strain student debt imposes across age groups.
Practical Advice for Borrowers
1. Explore Income-Driven Repayment Plans
Income-driven repayment (IDR) plans can adjust your monthly payment based on your income and family size, potentially lowering your payment to as little as $0.
2. Consider Loan Consolidation or Rehabilitation
If you’re in default, loan consolidation or rehabilitation can help you get back on track. Consolidation combines multiple loans into one, while rehabilitation involves making a series of on-time payments to remove the default status.
3. Stay Informed and Communicate with Your Loan Servicer
Regularly check your loan status and communicate with your loan servicer to stay informed about your options and any changes to repayment policies.
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Frequently Asked Questions (FAQs)
Q1: What happens if I miss a student loan payment?
Missing a payment can lead to delinquency and eventually default, which negatively impacts your credit score and can result in wage garnishment or tax refund seizures.
Q2: Can I qualify for loan forgiveness?
Certain programs, like Public Service Loan Forgiveness (PSLF), offer forgiveness after meeting specific criteria.
Q3: How can I improve my credit score after delinquency?
Consistently making on-time payments, reducing outstanding debt, and avoiding new debt can gradually improve your credit score over time.
