The Trump administration has intensified efforts to collect on unpaid student loans, placing older borrowers in the US at heightened risk of financial penalties. Nearly 1 in 5 student loan holders aged 50 and above are now classified as "seriously delinquent," meaning they are 90 days or more behind on their payments.
According to data released by the Federal Reserve Bank of New York and reported by CNBC, around 18% of older borrowers became seriously delinquent in the second quarter of 2025. This marks a significant increase from approximately 10% in 2019. By comparison, 8% of borrowers aged 18 to 29 and 11% of those aged 30 to 39 fell into the same category during the same period.
Older borrowers face growing repayment challenges
Older Americans are increasingly struggling to meet their student loan obligations as the Trump administration resumes federal collection activities. Many of these borrowers either took out loans to fund their children's education or returned to school later in life but did not experience the expected financial return, as reported by CNBC.
"Being delinquent on student loan debt is difficult for people who are approaching their retirement years," said Lori Trawinski, director of finance and employment at AARP, in a statement to CNBC. "People end up having to make extremely difficult choices."
Risk of garnishment increases after delinquency
Borrowers who fall behind on payments do not immediately face the most severe consequences. According to higher education expert Mark Kantrowitz, as quoted by CNBC, federal loan holders are considered in default after missing payments for over 270 days. For private loans, default may be declared after 120 days of non-payment.
While delinquency can affect credit scores, default triggers harsher collection methods. The US Department of Education may garnish up to 15% of a borrower's disposable wages, CNBC reported. Although the department has paused garnishment of Social Security benefits since May 5, no formal regulation has been issued to prevent such actions in the future.
Trawinski noted to CNBC that while wage garnishments are expected to begin later in the summer, there is still uncertainty about whether Social Security offsets will resume.
Options available to avoid default
Financial advisors stress the importance of exploring federal repayment plans to avoid default. Douglas Boneparth, a certified financial planner and member of the CNBC Financial Advisor Council, stated that income-driven repayment plans can "significantly lower monthly payments and prevent default," as reported by CNBC.
Borrowers can use tools on Studentaid.gov to estimate payments under different plans. The Income-Based Repayment plan remains available, though recent legal and legislative changes have limited other options, according to CNBC.
In addition to repayment plans, borrowers can apply for temporary relief such as forbearance or economic hardship deferment. Boneparth cautioned, as quoted by CNBC, that "requesting a temporary forbearance can buy time, but ideally, borrowers should aim for an affordable, sustainable payment plan."
The Education Department continues to encourage borrowers to take proactive steps to avoid default, especially those who remain employed and may soon be subject to wage garnishment.
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According to data released by the Federal Reserve Bank of New York and reported by CNBC, around 18% of older borrowers became seriously delinquent in the second quarter of 2025. This marks a significant increase from approximately 10% in 2019. By comparison, 8% of borrowers aged 18 to 29 and 11% of those aged 30 to 39 fell into the same category during the same period.
Older borrowers face growing repayment challenges
Older Americans are increasingly struggling to meet their student loan obligations as the Trump administration resumes federal collection activities. Many of these borrowers either took out loans to fund their children's education or returned to school later in life but did not experience the expected financial return, as reported by CNBC.
"Being delinquent on student loan debt is difficult for people who are approaching their retirement years," said Lori Trawinski, director of finance and employment at AARP, in a statement to CNBC. "People end up having to make extremely difficult choices."
Risk of garnishment increases after delinquency
Borrowers who fall behind on payments do not immediately face the most severe consequences. According to higher education expert Mark Kantrowitz, as quoted by CNBC, federal loan holders are considered in default after missing payments for over 270 days. For private loans, default may be declared after 120 days of non-payment.
While delinquency can affect credit scores, default triggers harsher collection methods. The US Department of Education may garnish up to 15% of a borrower's disposable wages, CNBC reported. Although the department has paused garnishment of Social Security benefits since May 5, no formal regulation has been issued to prevent such actions in the future.
Trawinski noted to CNBC that while wage garnishments are expected to begin later in the summer, there is still uncertainty about whether Social Security offsets will resume.
Options available to avoid default
Financial advisors stress the importance of exploring federal repayment plans to avoid default. Douglas Boneparth, a certified financial planner and member of the CNBC Financial Advisor Council, stated that income-driven repayment plans can "significantly lower monthly payments and prevent default," as reported by CNBC.
Borrowers can use tools on Studentaid.gov to estimate payments under different plans. The Income-Based Repayment plan remains available, though recent legal and legislative changes have limited other options, according to CNBC.
In addition to repayment plans, borrowers can apply for temporary relief such as forbearance or economic hardship deferment. Boneparth cautioned, as quoted by CNBC, that "requesting a temporary forbearance can buy time, but ideally, borrowers should aim for an affordable, sustainable payment plan."
The Education Department continues to encourage borrowers to take proactive steps to avoid default, especially those who remain employed and may soon be subject to wage garnishment.
TOI Education is on WhatsApp now. Follow us here.
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