As Federal Collections Activity Resumes, More Than One in Five Federal Student Loan Borrowers With a Payment Due are Seriously Delinquent
- TransUnion's comprehensive analysis provides valuable insights for lenders and borrowers
- The company offers TruVision Premium Student Loan Attributes to help lenders assess portfolio risks
- Record-high delinquency rate of 20.5% among federal student loan borrowers
- 50.8% of subprime borrowers are seriously delinquent, up from 38.8% in 2020
- Significant credit score impacts across all tiers, with super prime borrowers facing 175-point drops
- 23% of recent defaults came from prime and above risk tiers, indicating widespread financial stress
Insights
TransUnion reports record-high student loan delinquencies as federal collections resume, creating demand for their credit monitoring solutions while highlighting broader consumer financial strain.
TransUnion's latest data reveals a concerning milestone in the federal student loan market: 20.5% of borrowers with payments due are now seriously delinquent (90+ days past due) - nearly double the pre-pandemic rate of 11.5%. This represents the highest delinquency rate ever recorded as the Department of Education resumes collections activities after years of pandemic-related pauses.
The cross-credit tier impact shows a troubling pattern. While 50.8% of subprime borrowers are seriously delinquent (up from 38.8%), the increases in better credit tiers are proportionally more dramatic: near prime delinquencies jumped from 9.1% to 23.3%, and prime from 1.3% to 7.5%.
The credit score consequences are severe and highly stratified by risk tier. Defaults trigger an average 63-point score decline overall, but a staggering 175-point drop for super prime borrowers compared to just 42 points for subprime borrowers. This disproportionate impact occurs because higher-tier borrowers typically have cleaner credit files where a single default creates a more dramatic effect.
Most concerning is that 23% of recent defaults came from prime and above credit tiers - traditionally considered safer borrower segments. This widespread distribution of financial strain, despite strong employment figures, suggests deeper consumer financial fragility that may eventually manifest in other credit products.
For TransUnion, this situation creates increased demand for their specialized monitoring products as lenders scramble to identify at-risk borrowers across all segments. The timing of this analysis, coinciding with federal collection resumption, positions TransUnion as an essential data provider during this challenging transition period.
Record student loan delinquencies create market opportunity for TransUnion's risk assessment products as lenders rush to identify at-risk borrowers across all credit tiers.
TransUnion's strategic release of this student loan delinquency data directly aligns with their business model as a credit reporting and analytics provider. By highlighting that a record 20.5% of federal student loan borrowers with payments due are seriously delinquent - an unprecedented jump from 11.5% pre-pandemic - TransUnion demonstrates the urgent market need for their specialized risk assessment products.
The company explicitly notes a "surge in lenders incorporating student loan-specific insights into portfolio reviews and doing those reviews more often" - a direct business driver for TransUnion's data services. Their featured product, TruVision Premium Student Loan Attributes, helps lenders identify affected consumers across all credit segments - particularly valuable given the surprising finding that 23% of recent defaults came from prime and above borrowers.
The presentation of this analysis at their Financial Services Summit to 300+ industry executives represents a calculated marketing opportunity to showcase their analytics capabilities to decision-makers. The detailed breakdown of delinquency rates across credit tiers (from 0.9% for super prime to 50.8% for subprime) demonstrates the depth of TransUnion's data insights.
The stark credit score impact data (ranging from 42-point drops for subprime to 175-point reductions for super prime borrowers) effectively illustrates the value proposition of TransUnion's monitoring solutions. As federal collections resume after years of pandemic-related pauses, TransUnion has positioned itself as the essential resource for risk assessment during this volatile transition.
While the macroeconomic implications of widespread student loan defaults are concerning, TransUnion's business model is designed to monetize exactly this type of market uncertainty through increased demand for their specialized data products.
New TransUnion analysis explores the percentage of student loan borrowers at risk of default and the credit score impacts
CHICAGO, May 05, 2025 (GLOBE NEWSWIRE) -- As the U.S. Department of Education begins resuming collections activities among defaulted borrowers, new research reveals that the number of consumers at risk for default has soared past pre-pandemic levels. These findings come from a new analysis conducted by TransUnion (NYSE: TRU) and featured at the company’s 2025 Financial Services Summit, attended by 300+ leading industry executives.
The Department of Education (DOE) initially suspended federal student loan payments in March 2020. The agency called for payments to resume in September 2023, with servicers directed not to report them to credit bureaus until October 2024, with the requirement that borrowers only be reported to credit bureaus as delinquent when they reach 90 days or more past due on federal student loan accounts. Last month, the DOE announced it would resume collection activities effective today.
The analysis found that
More Consumers are 90+ Days Past Due (90+ DPD) Than Just Prior to the Pandemic
| February 2020 | February 2025 | |
| Total |
Source: TransUnion U.S. Consumer Credit Database
"Student loans and their payment reporting are complex. More than one in five federal student loan borrowers with a payment due have been reported as seriously delinquent, but this figure may in fact be much higher," said Michele Raneri, vice president and head of research at TransUnion. "The complexity arises in part from the various reasons borrowers might not be making payments without being considered delinquent, such as being a current student or in deferment or forbearance. We are continuing to analyze data to determine how many non-payers are at risk of being reported as seriously delinquent or default."
Across risk tiers, subprime saw the highest percentage of payment-due student loan borrowers seriously delinquent in February 2025, with
More Than Half of Subprime Federal Student Loan Borrowers With a Payment Due Were 90+ DPD
| February 2020 | February 2025 | |
| Super prime | ||
| Prime plus | ||
| Prime | ||
| Near prime | ||
| Subprime |
Source: TransUnion U.S. Consumer Credit Database
The analysis also found that those consumers who had faced default since the end of the on-ramp saw their credit scores decline by an average of 63 points. And while a lower percentage of super prime borrowers were seriously delinquent, those who did ultimately default saw the impact on their credit scores to be significantly greater than that of traditionally more risky credit tiers. This is largely due to the fact that borrowers in higher credit risk tiers typically have fewer derogatory marks, so an account in default has the potential to have a significant and jarring impact.
Among those borrowers who experienced a default in the months of January and February 2025,
Consumers in the Super Prime Credit Tier Were the Most Impacted by Student Loan Default
| Risk Tier Prior to Default | Average Credit Score* Change |
| Super prime | -175 pts |
| Prime plus | -121 pts |
| Prime | -99 pts |
| Near prime | -64 pts |
| Subprime | -42 pts |
*VantageScore® 4.0
"Consumers may find themselves shocked by the dramatic and immediate impact that a default can have on their credit scores. Likewise, lenders need to recognize the significant potential impact on otherwise low-risk borrowers," said Joshua Trumbull, senior vice president and head of consumer lending at TransUnion. “That need to identify potentially impacted consumers and the associated risk is creating a surge in lenders incorporating student loan-specific insights into portfolio reviews and doing those reviews more often.”
To gain additional insights into how student loans are impacting the wallets of their potential customers, lenders can leverage TruVision Premium Student Loan Attributes to see details about student loan types, balances, and payment histories to help identify impacted consumers. Consumers seeking more information about how student loans affect credit can read our consumer blog on the topic.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world. http://www.transunion.com/business
| Contact | Dave Blumberg |
| TransUnion | |
| david.blumberg@transunion.com | |
| Telephone | 312-972-6646 |
FAQ
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