It’s 2 million now with another 4 million projected. And jobs are harder to find.
Student-Loan Borrowers Are at Risk of Docked Pay This Summer
The Wall Street Journal reports Nearly Two Million Student-Loan Borrowers Are at Risk of Docked Pay This Summer
Roughly six million federal student-loan borrowers are 90 days or more past due after a pandemic-era reprieve ended, according to TransUnion. The credit-reporting company estimates that about a third of them, or nearly two million borrowers, could move into default in July and start having their pay docked by the government. That’s up from the 1.2 million that TransUnion had estimated in early May.
An additional one million borrowers are on track to default by August, followed by another two million in September. Borrowers fall into default when they are 270 days past due.
Wage garnishment is also set to restart this summer. Until past due payments are paid in full or the default status is resolved, borrowers could see up to 15% of their wages automatically deducted from their paychecks.
Borrowers who have been newly reported as delinquent since then on their student loans have seen an average 60-point drop in their credit scores, according to TransUnion. Nine percent of borrowers who fell into delinquency were current on their payments by April, according to TransUnion.
The Education Department has been urging borrowers to resume payments and emphasizing the consequences. Roughly 43 million borrowers owe more than $1.6 trillion in student-loan debt.
More than nine million of them are expected to see their credit scores drop this year, according to data from the New York Fed released in March.
This is no small deal. Millions of zoomers and millennials are spending every penny right now and struggling.
Now come wage garnishment up to 15 percent.
And those graduating now are struggling with a much tougher job market.
Gen Z College Grads Hit the Job Market at the Worst Possible Time
Business Insider reports Gen Z College Grads Hit the Job Market at the Worst Possible Time
Zoomers are staring down a tough hiring market: Economic uncertainty has contributed to employees’ wariness to quit and companies’ hesitancy to hire. Artificial intelligence is disrupting the entry-level rung of the career ladder in industries like tech. Recent graduates have told Business Insider that they’re frustrated by hundreds of rejected applications and being ghosted by prospective employers. Some are settling for whatever work they can find.
It’s long been typical for 20-somethings to have a higher unemployment rate than the general population, and the overall US unemployment rate is still relatively low. One relatively new development, however, is that young people with college degrees are being hit hard by the economic slowdown — especially if they’re hoping to land a role in traditionally white-collar fields. Many Gen Zers are losing faith in the ROI of higher education and are turning toward blue-collar opportunities.
The unemployment rate for recent college graduates ages 22 to 27 has soared compared to unemployment for all workers ages 16 to 65 in recent years. This is a new trend: young people with degrees have historically almost always been more likely to be employed than the rest of the labor force.
The unemployment rate gap between the total workforce and recent grads was historically wide this spring, meaning that the job market for 20-somethings with degrees is among the worst the cohort has seen in at least four decades. Those who studied anthropology, physics, or computer engineering had the highest unemployment rates in 2023, per the Federal Reserve Bank of New York’s analysis of Census Bureau data.
The pool of jobs available for Gen Z — and the workforce as a whole — to apply for has shrunk. Job openings have cooled from 12 million in March 2022 to 7 million this past April. In what’s been dubbed the Big Stay, current employees are holding on to their seats as well, with the monthly quit rate falling from 3% in March 2022 to 2% this past April.
Small and midsize businesses aren’t hiring as many recent grads
Gusto, a payroll and benefits platform for small- and medium-sized businesses, found the rate of primarily white-collar hires aged 20 to 24 at small and midsize employers has fallen from pre-pandemic levels, declining from 9.4% in May 2019 to 2.7% this past March.
Even if new graduates have a job, they may be working in a role that doesn’t typically require a college degree. While this figure fluctuates over time, the share of 20-somethings who have jobs they’re overeducated for is rising in 2025. It coincides with the generation’s pivot toward skilled-trades roles such as electricians or plumbers.
Fed Chair Jerome Powell says the labor market is healthy.
I disagree.
