May 18, 2025
Black student loan debt carriers are overrepresented relative to their share of the population.
Student loan delinquencies have surged, according to the New York Federal Reserve’s latest household debt report released May 13, following the Trump administration’s decision to end the Biden-era pause on reporting missed payments.
According to the Fed, a serious federal student loan delinquency occurs when a borrower misses payments for 90 days or more. That rate jumped from 1% in the first quarter of 2024 to nearly 8% in the same period of 2025, coinciding with the resumption of delinquency reporting.
Daniel Mangrum, a research economist at the New York Fed, noted the increase in his comments on the report in a news release.
“Transition rates into serious delinquency have leveled off for credit card and auto loans over the past year,” Mangrum said. “However, the first batch of past due student loans were reported in the first quarter of 2025, resulting in a large jump in seriously delinquent borrowers.”
During the height of the pandemic in 2020, student loan payments and delinquency tracking were paused and borrowers were given a one-year transition period after the payments resumed in late 2023 which offered them some protections, but the renewal of the student loan reporting has helped to get the rate of consumer debt to its highest level in five years.
Black people who owe student loan debt are overrepresented relative to their share of the population.
According to the Education Data Initiative, Black college graduates owe an average of $25,000 more than white college graduates; four years post-graduation, Black students owe an average of 188% more in student loan debt than white graduates; and Black student loan borrowers are the most likely to struggle financially due to student loan debt as their average payments are $258 a month.
In addition to this, half of all Black student loan borrowers indicated that their student loan debt exceeds their net worth, while 52% of Asian and white borrowers reported the inverse of that relationship, yet another figure that points at the socioeconomic conditions that color any discussion about finances and wealth in the United States of America.
According to Donna Rasmussen, the executive director of the Consumer Credit Counseling Service of Northern Illinois, the average federal student loan debt amount, including both private and federal student loans, is approximately $38,500.
Rasmussen also pointed to competing raises in the cost of living for many as a reason why they opted to stop paying their student loans.
“I think also they were prioritizing different essential items at that time. Rents have increased to a crazy amount. Car insurance, all the things have increased,” Rasmussen told ABC 7 Chicago. “We hear a lot from people who will say, ‘We’d rather be in debt than homeless.’ So, they’re prioritizing their food, their car payments. They’re not going to lose their house if they don’t make their student loan payment.”
Rasmussen continued, detailing what usually happens once a borrower is officially considered in default on a student loan, “Well if you haven’t made a payment in 90 days, then you probably should know that you’re in default. You will get a notice, either in the mail or in your email, giving you options about what to do. With this student loan debt, they’re not required to go to court. You’ll get a notice that your wages are going to be garnished.”
According to The Detroit Free Press, in order to avoid this outcome, borrowers are being encouraged to contact the Education Department’s default resolution group to make a monthly payment, to enroll in an income-driven repayment plan, or to sign up for loan rehabilitation. However, due to the Trump administration’s haphazard budget cuts, some are having difficulties accessing the Education Department for relief.
Despite the cuts in employment at the Education Department, which are currently adversely affecting student loan borrowers, the Education Department is still warning the public to be wary of scammers who will attempt to prey on their desperation and to contact their loan servicers for assistance.
“If you are contacted by a company asking you to pay “enrollment,” “subscription,” or “maintenance” fees to help you get out of default,” the Education Department states on its website, “you should walk away. Your loan holder will help you with your defaulted loan for free.”
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