Student Loan Delinquencies Surge to Alarming Levels—Credit Score Report

Introduction:

Financial pressure is building across the country, and new data shows that student loan borrowers are being hit the hardest. According to a recent TransUnion report, delinquencies among borrowers especially renters have doubled in just a few months following the end of pandemic-era federal student loan forgiveness.

For millions of Americans, 2025 has become the year where repayment resumed, protections disappeared, and budgets buckled. The numbers coming out now reveal a crisis that goes far beyond student loans it’s spilling into housing, credit access, and financial stability as a whole.

Delinquencies Have Doubled in 2025

TransUnion’s analysis highlights just how quickly the situation deteriorated:

• In January 2025, 15% of rental applicants with student loans were 90+ days delinquent.

• By May 2025, that number jumped to 32%.

Alongside rising delinquencies, more than 2.2 million borrowers saw their credit scores fall by over 100 points in a matter of months.

These are not small changes. A 100-point drop can instantly disqualify someone from renting an apartment, securing a car loan, or even qualifying for certain jobs.

Why Delinquencies Are Exploding

TransUnion points to a clear turning point:

the end of pandemic-era student loan forgiveness and the resumption of payments.

After years of paused payments, millions were required to restart monthly bills they were no longer financially prepared for. And the impact has been immediate:

• Budgets tightened overnight

• Emergency savings evaporated

• Renters lost access to higher credit tiers

• Borrowers who were already behind slipped deeper into delinquency

But this isn’t only happening with student loans. Defaults and delinquencies are rising across nearly every major credit category a trend experts describe as highly irregular and a warning sign for the broader economy.

What the Data Shows: Borrowers Are Sliding Into Riskier Credit Tiers

The report shows a dramatic reshuffling of creditworthiness across the board:

Super Prime (781–850)

• 51% dropped to Prime

• 45% dropped to Near Prime

Prime+ (721–780)

• 34% shifted to Prime

• 58% shifted to Near Prime

Prime (661–720)

• 59% moved to Near Prime

• 23% fell into Subprime

Near Prime (601–660)

• 63% fell into Subprime

Borrowers who appeared financially stable just six months ago now fall into categories that raise red flags for lenders and landlords.

Even the most credit-secure demographics aren’t being spared.

Why This Matters for Renters and the Housing Market

For renters, the consequences are immediate and severe.

TransUnion warns that these shifts are reshaping the rental market, making it harder for property managers to rely on traditional credit models to predict risk.

Their team writes:

“Renters who looked financially solid six months ago may now trigger alarms in your screening system.”

Maitri Johnson, TransUnion’s EVP of Tenant & Employment Screening, adds:

“Applicants who once met screening thresholds are now falling short.”

And as financial pressure builds, the report also warns of rising risks of fraud, with renters under stress more likely to falsify documentation just to secure housing.

Millions Were Already Behind Before Payments Restarted

This crisis didn’t begin in 2025 it was quietly growing beneath the surface during the repayment pause.

Before collections resumed:

• 5 million borrowers had not made a payment in over a year

• 4 million were already in late-stage delinquency

When repayment restarted, these borrowers quickly slipped deeper into default, dragging their credit scores and financial opportunities down with them.

With 42.5 million Americans holding nearly $1.7 trillion in federal student loan debt, the magnitude of this crisis is impossible to ignore.

Where Borrowers Go From Here

The combination of rising delinquencies, dropping credit scores, and tightening rental screening is creating a financial environment that many borrowers have never had to navigate before. And with additional federal repayment reforms arriving in 2026, the pressure will only intensify.

This moment calls for strategy, clarity, and guidance not guesswork.

Borrowers need to understand:

• What repayment plan gives them the lowest sustainable payment

• Whether consolidation will help or hurt their future forgiveness options

• How to avoid falling into delinquency or default

• How to protect their credit during this volatile period

• How upcoming 2026 RAP and OBBBA reforms will change their repayment path

That’s exactly where Key 2 Debt Free steps in.

We help borrowers regain control not just over their payments, but over their long-term financial future.