A new report from the Federal Reserve reveals a troubling financial trend: U.S. household debt hit a record $18.2 trillion in the first quarter of 2025, with student loan delinquencies skyrocketing after years of paused payments.
The report shows student loan balances jumped by $16 billion, totaling $1.63 trillion nationwide. But the bigger issue? Nearly 6 million borrowers—about 14%—are now more than 90 days behind on payments or in default.
These rising delinquencies are hitting Black borrowers and Houston residents particularly hard.
From pause to panic
During the COVID-19 pandemic, federal student loan payments were paused for 43 months. That relief ended in October 2023, followed by a 12-month grace period where missed payments didn’t hurt borrowers’ credit. But when that “on-ramp” period expired at the end of 2024, a wave of credit damage followed.
Now, more than 2.2 million Americans have seen their credit scores drop by over 100 points. More than 1 million of them saw a drop of at least 150 points, according to the New York Fed.
“Your credit score is one of the most important numbers in your financial life,” said Ted Rossman, senior industry analyst at Bankrate. “It affects whether you qualify for loans, what interest rates you pay, and even your ability to rent an apartment or get a job in some industries.”
For borrowers who had good credit before—scores above 720—the average drop was 177 points. Those with scores between 620 and 719 saw drops of around 140 points. That shift can make the difference between being approved for a mortgage and being denied.
Houston’s hit
Tens of thousands of Houston residents are still struggling with student loan debt, and the effects are real and immediate.
“People are getting denial letters for apartments, higher car insurance premiums, and rejections for home loans—all because of their student loan history,” said Julia Berry, a Houston realtor. “Many of these folks are first-generation college students, trying to build wealth and stability. This is a huge step backward.”
Berry says she’s seen an uptick in clients—especially Black women and older borrowers—seeking help to avoid default or repair their credit.
The age of borrowers in trouble is rising, too. The New York Fed reports that the average age of a delinquent borrower has gone from 38.6 to 40.4 years. That signals that older millennials and Gen Xers—many juggling mortgages, kids, and aging parents—are struggling most with resumed payments. Recent grads say they’re being hit hard as well, as they face serious delinquency from unaffordable payments.
“My payment went from $25 a month to $695 a month and they would not work with me in any shape, form or fashion,” said Simone, a first-year teacher’s aide in HISD. “I just graduated and am barely making ends meet. I can’t afford such a significant increase and when I called the student loan people, they told me to ‘borrow the money from a family member.”
What borrowers can do now
Experts say the key to recovering from delinquency is taking action now:
- Enroll in an income-driven repayment plan if available to lower monthly payments.
- Consider loan consolidation or rehabilitation if you’ve already defaulted.
- Become an authorized user on a family member’s credit card or apply for a secured credit card or credit-builder loan.
- Stay consistent with all other bills—credit cards, utilities, and rent.
“There is very little in life more expensive than bad credit,” Schulz said. “But the good news is, credit damage isn’t permanent. With steady effort, it can be rebuilt.”
For Houston borrowers unsure where to start, organizations like the Houston Area Urban League and the United Way THRIVE Financial Opportunity Centers offer free financial coaching and assistance with loan repayment plans.
Need help?
Call the Federal Student Aid hotline at 1-800-433-3243 or visit studentaid.gov
For local financial help, visit hawc.org or houstonurbanleague.org.
NNPA contributed to this report.
