A record number of student loan borrowers have a very big problem

And it could have a major impact on their credit scores.

Transcript

00:00Now that the Trump administration has vowed to restart collecting the federal student loans in

00:04default, TransUnion revealed how messy the situation could potentially get. A new report

00:08by the firm shows that roughly 20% of federal student loan borrowers with a payment due are

00:13seriously delinquent. That means about 4 million Americans have a payment that's 90 plus days

00:18overdue. For comparison, in February 2020, just before the start of the pandemic, 11.5% or 2.6

00:25million people fell into the seriously delinquent category. A serious delinquency can drastically

00:30affect your credit score. According to the Federal Reserve Bank of New York, new student loan

00:34delinquencies have dropped excellent credit scores by an average of 171 points. Subprime borrowers have

00:40taken an average hit of 87 points. A delinquency can also limit the amount you're allowed to borrow,

00:45as well as increase the cost of future loans. And according to TransUnion's head of U.S.

00:50research and consulting, borrowers who have not been repaying will likely have to make a number

00:54of challenging budgeting decisions. That'll do it for your daily briefing. From New York

00:58City, I'm Kelsey Barbario with The Street.