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New York Fed finds ongoing student loan woes in first quarter
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New York Fed finds ongoing student loan woes in first quarter
May 12, 2026 8:18 AM

NEW YORK, May 12 (Reuters) - Ongoing U.S. student loan troubles do not appear to be on track to create broader woes in the consumer lending space, a New York Federal Reserve report released on Tuesday showed.

The regional Fed bank made the finding in its broad overview of consumer debt trends in the first quarter, which found modest gains in key borrowing types and little change in overall delinquency rates, in a period marked by a stable job market and ongoing economic growth.

Student loan borrowing has over recent quarters been on a troubling path after the government began to compel borrowers to repay loans again after a long break. The New York Fed noted that the flow of student loans moving into serious trouble moderated during the quarter and the overall level of defaults in that type of borrowing was "relatively low."

Student loan borrowers, however, have "very high delinquency rates across all credit products" and "these high rates suggest that their payment struggles extend beyond student loans - and are likely to worsen when collection efforts resume," according to a blog post accompanying the New York Fed debt report.

Despite those troubles, their usage of overall credit in the U.S. economy is relatively modest, and "spillover from the recent wave of defaults and delinquencies to broader credit markets is likely to be limited," New York Fed economists wrote.

Beyond student loan borrowing, Americans' debt management is "on pretty stable footing overall" amid some signs of "weakness," New York Fed researchers said in a conference call with reporters.

The report said the transmission rate of student loans shifting into serious delinquency stood at 10.9% in the first quarter, compared to a 16.2% rate in the fourth quarter of 2025.

The overall delinquency rate for student loans in the first quarter was 10.3% for loans three months or more in trouble, up from 9.6% at the end of the fourth quarter of 2025. Some 2.6 million student loan borrowers who were 120 days or more behind on their repayments had their loans referred to the U.S. Department of Education's Default Resolution Group.

The report said total delinquency rates on debt were mostly steady during the first quarter at 4.8%.

HOUSEHOLD DEBT TRENDS STABLE

Overall household debt trends were stable in the first quarter.

It is unclear whether that relative calm will hold as consumers face surging energy prices tied to the war in the Middle East, which has disrupted global supply chains. Recent New York Fed research said lower-income households are being increasingly stressed by the higher energy costs.

The New York Fed's report showed that overall household debt levels stood at $18.8 trillion in the first quarter, up $18 billion from the final three months of 2025. Total mortgage balances hit $13.2 trillion, up $21 billion from the prior quarter, while credit card debt fell $25 billion to $1.3 trillion.

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