After lying to amass votes by any means possible, Joe Biden’s student loan handout failure has devastated borrowers as delinquencies skyrocketed to 8% from less than 1% a year ago.
Americans now face government collection agents seizing wages and benefits while credit scores plummet by as much as 175 points, destroying financial futures across the nation.
The end of the staggering 43-month pandemic-era moratorium on federal student loan repayments has forced Americans to go through a reality check.
According to data from the Federal Reserve Bank of New York, serious delinquencies (payments 90+ days past due) have surged from a mere 0.8% to a staggering 8% in just one quarter.
This dramatic spike represents roughly six million borrowers who are now past due or in default, accounting for over 10% of all outstanding student loan balances.
The Education Department recently kicked its collection machine into high gear, restarting involuntary collection efforts on May 5.
These included garnishing wages, tax returns, and even Social Security payments.
The hardest-hit Americans are concentrated in Southern states, with seven states reporting delinquency rates exceeding 30%: Mississippi, Alabama, West Virginia, Kentucky, Oklahoma, Arkansas, and Louisiana.
Contrary to popular belief, it is not young graduates who are struggling the most.
Borrowers aged 40 and older have higher delinquency rates than those under 40, with the 40-49 age group suffering the highest rates.
“The impact that it showed to these people’s credit scores is pretty staggering, that is something that is going to make things harder for people for a long time,” explained LendingTree chief credit analyst Matt Schulz.
“There is very little in life that is more expensive than having crummy credit,” he continued.
The destruction to borrowers’ credit scores has been catastrophic. Late-paying borrowers have seen their scores plummet by up to 171 points.
Meanwhile, those with previously excellent credit (super prime borrowers) have experienced devastating drops of up to 175 points.
These declines will haunt borrowers for years, affecting their ability to buy homes, finance vehicles, or even get hired for certain jobs.
The current crisis follows the Supreme Court’s 2023 decision blocking Biden’s unconstitutional mass student loan forgiveness initiative.
The Education Department under President Donald Trump now has the daunting task of “restoring repayment discipline.”
“This has been like a car crash unfolding in slow motion…the clock is running out,” stated Bankrate senior industry analyst Ted Rossman.
Meanwhile, Americans owe a record $18.2 trillion in total household debt, including an additional $199 billion in new mortgage balances from January through March 2025 alone.
The situation will only worsen in June when the Education Department begins targeting 195,000 borrowers with its first wave of involuntary collections.
This event will be followed by wage garnishment notices to 5.3 million defaulted borrowers.
