The rate of stumbling from the payment of loans in the United States has increased, which led to a sharp reduction in the credit of millions of citizens in the first quarter of the year.
According to a recent report issued by the American Federal Reserve (Central) in New York, nearly 6 million borrowers of students (about 14%) were late to pay for 90 or more days between January and March 2025.
The increase in the rates of backwardness throughout the country – accompanied by a decrease in their credit grades – represents a major challenge to millions of Americans, and it has significant negative effects on the economy, according to the American Newsweek magazine.
The failure to pay student loans negatively affects their credit grades, which may make them difficult to make some large purchases, such as buying a house or car.
The new data – received in the report of the Federal Reserve in New York – indicates that millions of Americans will face more difficulty in obtaining car loans and real estate loans, at a time when many already suffer from historically high monthly installments and high costs in general, or they may face a higher benefit.
Payment
After the Korona’s pandemic struck the world, it was allowed to postpone the payment of student loan installments for 43 months, and the payments were officially resumed in October 2023, but the US Department of Education granted borrowers an additional period of 12 months, during which they were protected from most of the consequences of backwardness, including reporting the late payments of credit offices.
New data shows that those with student loans face difficulty in paying their installments after the end of the “gradual return” period in late 2024, and according to the New York Federal Reserve Bank, the rate of delay in paying student loans increased from less than 1% to nearly 8% during the first quarter of 2025.
Between January and March, 13.7% of student loans ’parallels were delayed for paying their installments for 90 days or more, while 23.7% delayed payment for a period of less than 90 days.
The failure to pay student loans negatively affects their credit grades, which may make them difficult to make some large purchases, such as buying a house or car.
Consequences
According to the American magazine, the delay in payment has difficult consequences for these borrowers. More than 2.2 million newly late borrowers witnessed a decrease in their credit by more than 100 points, according to the data of the Federal Reserve in New York, while more than a million people witnessed a decrease in their credit by at least 150 points.
“There is no more expensive in life than poor credit,” the magazine quoted Matt Schulz, chief consumer financing analyst at Linding Tree.
“It may cost you tens of thousands of dollars or more throughout your life, through high interest rates, fees and other costs on mortgage, auto loans, credit cards and other loans. It may also lead to high insurance installments, and prevents you from getting the apartment you look to, and even difficult for you to get a mobile phone. It is a very big problem,” Schultz said.
The New York Federal Reserve found that about 2.4 million late borrowers were credit grades higher than 620 points, which means that they were eligible to obtain credit cards, car loans, or real estate loans before the recent declines. Now, they may not be eligible.
For his part, Ted Rosman, the chief analyst of the sector at Ret Bank – Newsweek – said that the degree of credit is one of the most important numbers in your financial life “because it is greatly determined if you are qualified to obtain financial products, in addition to the interest rates you will pay.”
