End of Payment Pause Strains Borrowers, Could Spill Over to CU Loans

After a three-year pandemic pause, federal student loan payments kicked back in during late 2023 – and by 2024 the effects were reverberating. Millions of Americans had to fit hefty student loan bills back into their budgets starting that October. The NCUA cautioned in a letter to credit unions that as payments resume, some members may struggle to meet all their obligations and could fall behind on other loans.

Credit unions were encouraged to work constructively with affected borrowers and even offer prudent relief without fear of examiner criticism. By early 2024, collections managers indeed saw a rise in stress among younger borrowers juggling new payments. Credit card and personal loan delinquencies ticked up in segments mirroring those with student debt. Fast forward to early 2025: research showed one in five student borrowers (20.5%) was seriously delinquent (90+ days past due) on their federal loans as of Feb. 2025, nearly double pre-pandemic levels. These delinquencies will soon start appearing on credit reports, potentially denting credit scores by dozens of points.

For credit unions, that could mean more members with weakened credit standing and less capacity to repay other debts. In 2024, many institutions responded by bolstering financial counseling, promoting refinance options, and monitoring portfolios for indirect impacts of the student debt burden.

Takeaway: The great student loan reboot added a new drag on household finances. Collections teams should be alert for borrowers who stay current on credit union loans by skimping on federal payments – or vice versa – and be ready to offer solutions (like refinancing or modified payment plans) to keep overall delinquency in check.