Americans and their Debts: Student loans that suddenly have to be repaid again fueled overall delinquency rates.

By Wolf Richter for WOLF STREET.

Total household debt outstanding in Q1 – mortgages, HELOCs, student loans, auto loans, credit card balances, and other consumer loans such as personal loans and BNPL loans – was nearly unchanged compared to the prior quarter, at $18.79 trillion, according to the Household Debt and Credit Report from the New York Fed today, which obtained this data via its partnership with Equifax. Year-over-year, household debt rose by 3.2%, or by $591 billion.

Compared to the prior quarter: HELOC balances jumped, auto loan balances rose, credit card balances fell, mortgage balances edged up, and student loan balances were essentially unchanged.

But the number of households has grown over the years, and the income per household has grown on average, and total household income has grown faster than total household debt, and the burden of this debt on that income has declined over the years.

The burden of the debt.

The debt-to-income ratio is one of the standard ways of measuring the burden of a debt. With households, an appropriate income measure is “disposable income,” released by the Bureau of Economic Analysis.

Disposable income is essentially the monthly after-tax income consumers have available to spend for their costs of living, to service their debts, and to save and invest.

It consists of after-tax wages, plus income from interest, dividends, rentals, farm income, small business income, transfer payments from the government, etc.

But it excludes capital gains, which is where the wealthy make most of their money. Excluded are thereby income from stock-based compensation plans and capital appreciation where billionaires make their billions.

The debt-to-disposable income ratio in Q1 dropped to 79.9%, as disposable income rose to a record while debt balances essentially remained unchanged.

This ratio was the lowest in the data going back to 2003, except for two quarters during the stimulus era, when disposable income was bloated out of all proportion by massive government handouts, including the stimulus checks, PPP loans, and numerous other programs.

Consumers are working and earning record amounts of disposable income, and their aggregate balance sheet is in good shape: 65% own their own homes, and about 40% of them own their homes free and clear, while another big portion has only a relatively small balance left on their mortgages. Over 60% of households have at least some equities, and their prices have exploded. And they hold precious metals and cryptos and are sitting on $5 trillion in money market funds plus a pile of CDs.

In other words, the balance sheet of the economic entity of American households is in good shape – unlike some other economic entities that are massively overleveraged, such as certain corners of finance, parts of Corporate America, and of course the federal government; that’s where the leverage and risks are, not with households this time around.

But that wasn’t always the case. Leading up to the Financial Crisis, consumers were highly leveraged and they were piling on debt, and when the debt-to-disposable-income ratio went over 115%, the whole thing began to implode.

Defaulted student loans fuel the overall delinquency rate.

Student loan balances were roughly unchanged in Q1 compared to the prior quarter, at $1.66 trillion, and up by 1.7% year-over-year.

This chart is a visual representation of two decades of bad government policy.

The 90-plus day student loan delinquency rate rose in Q1 to 10.3%, back where it had been before the pandemic, according to the NY Fed’s report today.

In 2025, federal student loans that had been covered by the government’s forbearance policies since 2020 came out of forbearance. During the government’s forbearance program, borrowers didn’t need to make payments, and their loans weren’t counted as delinquent, as if they didn’t owe this money. But that ended in 2025, and those federal student loans suddenly showed up on credit reports again, and delinquency rates exploded.

The overall 90-day delinquency rate got whacked by student loans and rose to 3.36%, the highest since before the free-money pandemic.

This is the amount of the total debt ($18.79 trillion) that was 90 days delinquent at the end of Q1, amounting to $631 billion (delinquency rate = delinquent amount divided by the amount of the debt).

While the 90-plus day delinquency rate for student loans was 10.3%, it was 0.95% for HELOCs and 1.09% for mortgages.

All of the delinquency rates are coming out of the pandemic free-money trough and are reverting to the levels of the pre-pandemic years (I will discuss those loan categories in separate articles over the next few days).

Foreclosures edged up further from the near-zero levels during the era of mortgage forbearance, when foreclosures were essentially impossible.

The number of consumers with foreclosures in Q1 of 59,160 was still below the low end of the Good Times in 2018-2019, and far below the number of foreclosures in prior years.

Third-party collections bounced off rock-bottom. The percentage of consumers with third-party collection entries on their credit reports rose to 5.0%, after having hit rock-bottom in Q4.

In 2013, as a result of the Great Recession and the unemployment crisis, over 14% of consumers had third-party collection entries on their credit reports.

A third-party collection entry is made into a consumer’s credit history when the lender reports to the credit bureaus, such as Equifax, that it sold the delinquent loan, such as credit card debt, to a collection agency for cents on the dollar. The New York Fed obtained this third-party collections data in anonymized form through its partnership with Equifax.

Bankruptcies near rock-bottom. The number of consumers with bankruptcy filings edged up to 124,020 in Q1, far below the low end of the Good Times before the free-money pandemic, which had also been historically low.

I will discuss housing debt, credit card debt, and auto debt in three separate articles over the next few days. Next one up is housing debt.

And in case you missed it: Weirdest U.S. Labor Market I’ve Ever Seen: Supply of Labor Shrinks Further while Private-Sector Jobs Grow

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