A MARTÍNEZ, HOST:
New data shows a growing problem with federal student loans. Millions of borrowers are at risk, at serious risk, of defaulting. NPR's Cory Turner explains.
CORY TURNER, BYLINE: Every three months, the Federal Reserve Bank of New York releases its quarterly report on household debt and credit. And the latest for the second quarter of 2025 tells a worrying story about federal student loan borrowers.
JOELLE SCALLY: More than 10% of balances were past due. That means that they've missed at least three payments.
TURNER: Joelle Scally is a policy economist at the New York Fed. And she says, considering the overall federal loan portfolio is now $1.6 trillion, 10% is a lot of money. And it's up from about 8% the quarter before. There's also another trove of new data that tells a similar story.
DANIEL MANGRUM: According to Department of Education's latest release that was run at the end of June...
TURNER: Daniel Mangrum is a research economist at the New York Fed.
MANGRUM: One in 3 federal student loan borrowers that are in repayment right now are in some stage of delinquency.
TURNER: Especially worrying are the borrowers in late-stage delinquency because they're so close to defaulting on their loans, which can trash their credit and have all sorts of terrible consequences. Default happens after at least nine months of missed payments, and that new Education Department data shows a lot of borrowers are dangerously close to that.
MANGRUM: Four-point-three million student loan borrowers nearing default is, of course, concerning.
TURNER: Mangrum says it's hard to know how concerning because millions of borrowers likely would have defaulted during the pandemic, but temporary safeguards prevented it. Those safeguards are now gone. And Mangrum says it's unfortunate, but maybe inevitable, that so many borrowers are tumbling toward default all at once. Still, if you add to that the Americans who are already in long-term default, you get a nearly 10 million borrower problem. And it's likely to get even worse, Mangrum says, because another 7 million to 8 million are in legal limbo and don't have to make payments yet.
MANGRUM: But eventually, they'll have payments due. And those people will be able to potentially go past due and add to the stock of delinquency if they don't make payments.
TURNER: Many of these borrowers are lower-income, too, making it even harder for them to keep up and avoid joining the flood of borrowers headed for default.
Cory Turner, NPR News. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
