Weekly Market Recap – May 26, 2025

On May 5, the U.S. Department of Education resumed collections for defaulted federal student loans. This news was accompanied by a dramatic spike in student loan delinquencies in 1Q25, up to 8.2% from 0.9% in 4Q24, as noted in a recent report from our Investment Bank colleagues. The resumption of collections is one of the last steps in the reinstitution of student loan payments following their pause from Mar. 2020 to Sep. 2023. After payments were resumed, delinquencies were still not reported to credit bureaus until mid-way through 4Q24, and collections did not begin until 1Q25. Among 42.7M student loan borrowers, 5M are now in default and 4M are seriously delinquent, threatening to push nearly 25% of the student loan portfolio into default.