- Nearly three quarters of federal student loan borrowers who are delinquent or in default (72%) say their credit score has declined as a result of being delinquent or in default; 27% have experienced a significant decline.
- According to Credit Karma platform data, 4.7 million members with federal student loans are delinquent, or have had their loans closed with a charge-off; among them, prime borrowers (720+) have seen an average score drop of 143 points.
- A quarter of federal borrowers who are delinquent or in default on their student loans (25%) say they’ve been threatened to have their wages or government benefits (i.e. social security) garnished because of unpaid student loan debt.
With the resumption of federal student loan collection efforts, many borrowers are facing financial pressure, sharp declines in credit scores, and limited options for repayment. Not only are budgets strained, but mental health is also suffering as fears of long-term indebtedness weigh heavily on borrowers.
According to a new study conducted online by The Harris Poll on behalf of Intuit Credit Karma, among 2,065 U.S. adults ages 18 and older, among whom 648 have outstanding federal student loan debt (referenced throughout as federal borrowers), 58% say that their student loan debt is the biggest financial stressor that they face today. Many borrowers face a mountain of debt with more than 2 in 5 federal borrowers (44%) estimating they have more than $50,000 in outstanding federal student loan debt; roughly 1 in 6 (16%) estimate that their balance surpasses $100,000.
The recent resumption of collection efforts on defaulted federal student loans is having expansive implications for delinquent borrowers – consequences that can have long-lasting effects on Americans’ ability to stay afloat financially, let alone make financial progress.
The dire state of delinquencies and defaults
According to the survey data, roughly a quarter of federal student loan borrowers say they are delinquent or in default on their student loans (24%), rising to 29% of millennial borrowers (ages 29 to 44) and 38% among federal borrowers with household incomes between $50K and $74.9K.
Credit Karma platform data paints a similar picture – currently, 4.7 million Credit Karma members with federal student loan balances are delinquent on their loans or have had their loans closed with a charge-off. Many of these borrowers are more than 120 days late on their payments.
The inability to pay down student loan debt could stem from stagnant incomes amid an elevated cost of living as 68% of federal borrowers who are delinquent or in default on their loans say their current income is not sufficient to cover both their living expenses and student loan payments. In some cases, dipping into savings isn’t even an option. Roughly a quarter of federal borrowers who are delinquent or in default on their student loans (23%) say they don’t have any money in savings.
Missed payments tank credit scores and disrupt lives
Among federal borrowers who are delinquent or in default on their student loans, nearly three quarters (72%) have seen their credit score decline as a result; 27% say they have experienced significant declines in their score. Of those who saw a decline, nearly 7 in 10 (69%) saw their scores drop by 50+ points, while 40% saw their scores decline by 100+ points.
Here is a look at the breakdown of credit score impact among the 4.7 million Credit Karma members who are delinquent on their federal student loans, or have had their loans closed with a charge-off:
| Credit score band | Average score drop | Maximum score drop |
| < 599 | 72 points | 262 points |
| 600-659 | 106 points | 320 points |
| 660-719 | 138 points | 353 points |
| 720+ | 143 points | 365 points |
Damaged credit can cause a lot of friction in people’s lives, but the consequences become painfully real when it starts affecting day-to-day life. More than half of federal student loan borrowers who are delinquent or in default on their loans (58%) say their student loan debt has affected their ability to rent an apartment or secure housing, a quarter (25%) say they’ve been threatened to have their wages or government benefits (i.e. social security) garnished because of unpaid student loan debt, and some have even been denied a job due to their student loan status (13%) or due to their credit (13%).
Setbacks like these can greatly impact people’s ability to move their lives forward, depicted by the quarter of federal borrowers with outstanding debt who have delayed major life milestones (e.g. buying a home, getting married, starting a family) because of their student loan debt (25%), rising to 30% of millennial borrowers. Perhaps even more grim is the lack of confidence in borrowers’ ability to come out on the other side. Three in 5 federal student loan borrowers (60%) are worried they will never be able to pay off their student loans, climbing to 73% of those who are delinquent or in default. Sadly, the financial burden is taking a toll on borrowers’ mental health with 67% of those who are delinquent or in default admitting it has caused them significant anxiety and/or depression.
Adjustments are necessary to free up funds
Most federal student loan borrowers (91%) are taking steps, or plan to take steps, to free up funds to make payments toward their student loans – some measures more extreme than others. Those steps include:
| Take on additional work to increase income | 32% |
| Decrease non-essential spending (i.e. eating out, streaming subscriptions) | 30% |
| Apply for an income-driven repayment (IDR) plan | 28% |
| Apply for forbearance or deferment | 25% |
| Prioritize student loan payments over necessities (i.e. groceries, bills) | 24% |
| Consolidate student loans | 23% |
| Find a more affordable housing situation (i.e. move in with parents, find a roommate) | 21% |
| Sell stocks or investments | 20% |
| Dip into emergency savings | 18% |
| Decrease or stop making retirement contributions | 17% |
| Charge more expenses to credit | 16% |
| Explore bankruptcy options | 14% |
| None – I don’t have plans now to make payments toward my student loans | 9% |
| Other | 6% |
“Millions of student loan borrowers are under tremendous financial strain as they balance rising living costs with their debt obligations,” said Courtney Alev, consumer financial advocate at Intuit Credit Karma. “Missing payments doesn’t just create short-term stress – it can have long-lasting effects on credit scores, limit access to future credit, and even impact housing or employment prospects. If you’re at risk of delinquency or default on your federal student loans, log in to your account at the Federal Student Aid website to review your loan status. Then, reach out to your loan servicer to explore options like consolidation or income-driven repayment plans. Taking action now can help protect your financial future and make repayment more manageable.”
Methodology
This survey was conducted online within the United States by The Harris Poll on behalf of Credit Karma from May 29 – June 2, 2025 among 2,065 U.S. adults ages 18 and older, among whom 648 have outstanding federal student loan debt. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 4.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact pr@creditkarma.com.