Almost 10M Student Loan Borrowers Are Past Due

The credit scores of almost 10 million people are about to take a massive hit, the Federal Reserve Bank of New York warns in its latest update on student loans. The New York Fed estimates that 9.7 million student loan borrowers became past due on their payments after September 30 of last year, CNBC reports. That's when a 12-month "on-ramp" to repayment that President Biden brought in after the end of the COVID-era pause on payments expired. The on-ramp shielded borrowers from the negative effects of missed payments, but their credit scores could now drop more than 150 points. Delinquencies "will hit credit reports over a rolling window as borrowers with missed payments advance beyond 90 days past due," the New York Fed said.

The New York Fed believes delinquencies have reached record levels. "According to these numbers, it is reasonable to expect student loan delinquency to surpass pre-pandemic levels when new delinquencies hit credit reports," it said. The New York Fed estimates that the delinquency rate has hit 15.6%, involving more than $250 billion in debt. Ted Rossman, senior industry analyst at Bankrate, tells CNN that the student loan burden may be causing people to fall behind on other debt. "It's the 'you can't get blood from a stone' idea: That money's got to come from somewhere," Rossman says. (More student loans stories.)