Student-loan delinquencies rose again as household debt stayed near a record

Student-loan balances at least 90 days past due rose to 10.6% in the second quarter, up from 10.3% in the first quarter, as total U.S. household debt remained near a record, according to the Federal Reserve Bank of New York’s August 2026 household-debt report.

The report put outstanding student-loan debt at $1.65 trillion. Total household debt stood at $18.77 trillion at the end of June, down $13 billion, or 0.1%, from the first quarter. That small decline left reported household borrowing close to its record level.

The figures arrive as borrowers navigate repayment obligations and new federal repayment-plan choices that became available July 1, 2026. Because the New York Fed data cover the second quarter, they do not show whether those new plans will reduce future delinquency.

Credit-card and auto debt also increased

Non-housing debt rose by $48 billion during the quarter. Credit-card balances increased by $21 billion, while auto-loan balances rose by $28 billion.

The New York Fed’s Household Debt and Credit report is based on an anonymized, nationally representative sample drawn from Equifax credit-report records. It measures balances appearing on credit reports rather than surveying borrowers about their financial situations.

The report also said mortgage balances shown on credit reports fell by $74 billion during the quarter, largely because of a gap connected to mortgage-servicer transfers. Without that reporting issue, mortgage debt would have been roughly flat, the New York Fed said. That makes the small overall decline in reported household debt difficult to interpret as a broad reduction in borrowing.

Delinquency is not the same as federal default

The 10.6% figure is the share of student-loan balances that were 90 or more days past due. It is not the percentage of individual borrowers in federal default.

Delinquency can develop in stages. A payment may first become 30 days late and later reach 90 days past due. For most federal student loans, Federal Student Aid generally defines default as failing to make a scheduled payment for more than 270 days. A borrower can therefore be seriously delinquent without yet meeting the federal definition of default.

Once a federal loan is in default, the consequences can include negative credit reporting and collection activity. Federal Student Aid says that if a defaulted loan is consolidated, the default record and earlier late payments may remain on a credit history for up to 10 years. If the borrower completes a rehabilitation agreement, the Education Department will ask credit-reporting agencies to remove the default record after the ninth rehabilitation payment, although earlier late payments can remain.

If a borrower has been without a payment for more than 360 days and does not resolve the default, the government may use involuntary collection tools. Those tools can include administrative wage garnishment of up to 15% of disposable pay and a Treasury offset that withholds certain federal payments, such as a tax refund. These actions do not automatically affect every borrower in default.

New repayment options took effect July 1

A U.S. Department of Education fact sheet dated July 1, 2026, says federal borrowers can enroll in a new Tiered Standard repayment plan or an income-driven Repayment Assistance Plan, known as RAP.

The fact sheet describes Tiered Standard as offering fixed repayment terms of 10, 15, 20 or 25 years based on the amount borrowed. It describes RAP as setting payments according to income, with payments generally ranging from 1% to 10% of income and possible reductions for dependents. Eligibility and availability can vary, so borrowers should confirm their options through StudentAid.gov and the official repayment calculator.

What borrowers should check now

Check whether each federal loan is current, delinquent or in default through StudentAid.gov and the servicer listed in the account.
Contact the servicer before reaching 270 days past due if payments are becoming difficult.
Compare available repayment plans and confirm eligibility before enrolling.
If a loan is already in default, ask about consolidation, rehabilitation or a repayment agreement, including how each choice affects credit reporting and collections.
Watch for notices about wage garnishment or Treasury offset and use the official hearing or dispute procedures when appropriate.
Be cautious of companies seeking enrollment, subscription or maintenance fees to help with federal-loan relief. Start with official federal services instead.

The New York Fed’s latest numbers show student-loan repayment problems worsened slightly even as total household debt barely changed. For borrowers, the key question is whether a missed payment remains a temporary delinquency or progresses toward federal default, where credit and collection consequences can become more serious.

Sources

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