Amid Trump changes to key plans, millions are behind on student loans

Driving the news: TransUnion reported that 29% of borrowers — or 5.4 million people — were delinquent on their loans in June, meaning they had not made a payment in at least 90 days.

• That's slightly down from a record high of 31% in April.

What they're saying: Nearly half of federal student loan borrowers currently missing payments said they were not making payments because of other pressing bills.

• "During the extended federal student loan payment pause, many borrowers took on additional credit—possibly to manage rising living costs or other financial obligations," Joshua Turnbull, senior vice president of consumer lending at TransUnion, said in a statement. "Now, with payments resuming, borrowers are facing a financial reckoning."

By the numbers: About 42.7 million borrowers owe more than $1.6 trillion in federal student debt, according to the Department of Education.

• Pre-pandemic — in February 2020 — only about 11.7% of borrowers were reported as delinquent, according to TransUnion.

Catch up quick: The Department of Education announced in May that it would start referring those in default for debt collection, about 5.3 million people.

• In April, the department said that the Office of Federal Student Aid would send notices beginning administrative wage garnishment later in the summer.
• The department did not respond to Axios' request for comment on the timeline of wage garnishments.

The department might also withhold tax refunds or Social Security benefits, TransUnion noted.

President Trump's "One Big Beautiful Bill Act," which he signed into law in July, cuts the number of repayment plan choices that federal student loan borrowers have down to two.

• The law phases out the SAVE plan, which 8 million loan holders were enrolled in as of October 2024, per the Brookings Institution.