With the U.S. Department of Education’s “involuntary collections” on federal student loans now underway, millions of borrowers face a “default cliff,” reports show.
A new analysis by TransUnion found that as of April, 31% of student loan borrowers with a payment due are in “late-stage delinquency,” or over 90 days past due on payments. That’s the highest share the credit bureau has ever recorded.
As borrowers face repayment challenges — including questions about their loans and loan servicers as well as confusion over the current status of some income-driven repayment plans — more risk falling into delinquency and eventually defaulting, according to Joshua Trumbull, senior vice president and head of consumer lending at TransUnion.
“We don’t think this represents the ceiling,” Trumbull said. “Defaults will continue to tick higher.”
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