A new survey from TransUnion highlighted a growing concern related to student loans that might impact your auto-finance portfolio.

TransUnion said millions of delinquent federal student loan borrowers are bracing for the possible resumption of involuntary collections by the U.S. Department of Education, such as wage garnishment or the withholding of tax refunds or Social Security benefits.

When asked about the prospect of prioritizing student loan payments with their existing credit accounts, TransUnion reported that federal student loan borrowers indicated they intend to pay their mortgage and auto loans first.

However, in the face of involuntary collections, these individuals prioritized their student loan payments ahead of credit cards and personal loans, according to TransUnion.

TransUnion explained an early examination of delinquent federal student loan borrowers across the credit portfolio over the period from December 2024 to June 2025 supports this sentiment.

While serious delinquency rose across each of these credit products among the delinquent student loan population, analysts noticed the rate of growth was generally aligned with the priorities reflected in the survey.

TransUnion found that secured products, such as mortgages and auto showed a significantly lower increase in delinquencies than unsecured personal loans and credit cards.

Analysts added that it is worth noting that these delinquency findings only apply to the population of seriously delinquent student loan borrowers, which represents just over 5 million of the more than 200 million credit-active U.S. consumers.

“During the extended federal student loan payment pause, many borrowers took on additional credit—possibly to manage rising living costs or other financial obligations,” said Joshua Turnbull, senior vice president and head of consumer lending at TransUnion. “Now, with payments resuming, borrowers are facing a financial reckoning.

“Combined with the broader impact of elevated inflation and a higher cost of living, the threat of involuntary collections is causing a potential shake-up amidst the traditional payment hierarchy,” Turnbull continued in a news release. “Many are being forced to make difficult, short-term prioritization decisions as cash flows fail to meet spending and debt obligations.”

And Fitch Ratings is watching student loans closely, too.

U.S. Federal Family Education Loan Program (FFELP) ABS defaults fell in the second quarter but remained elevated, according to a new Fitch Ratings index report.

Fitch Ratings also said defaults on private student loans (PSLs) for traditional and refinance loans reached new highs, while delinquencies declined from the previous quarter.

“Persistent inflation, negative pool selection, and shifts in borrower payment priorities continue driving elevated defaults across student loans,” Fitch Ratings said in a news release. “Federal direct student loans collections have ramped up, including interest payments resuming in August for loans under the Saving on a Valuable Education (SAVE) program, which will constrain broader student loan performance through this year. While the FFELP ABS default rate is at its lowest level since 3Q23, defaults will likely remain above pre-pandemic levels.”

As part of the same TransUnion survey, nearly half of federal student loan borrowers currently missing payments indicated they were not making those payments simply because of affordability concerns.

The survey also showed another one-third responded that they were being forced to make the tough decision to prioritize other bills ahead of repaying their student loans.

“These challenging decisions are likely to persist for at least the short term, as the percentage of federal student loan borrowers reported as seriously delinquent has remained stubbornly high in recent months,” TransUnion said.

The most recently available data for July revealed that 29.0% of federal student loan borrowers in repayment — or 5.4 million individuals — were reported to be 90 or more days past due. TransUnion said that level is essentially flat compared to June.

While slightly down from its peak of 31.0% in April, analysts pointed out that the level marked the fifth consecutive month in which more than five million federal student loan borrowers were 90 days or more past due.

“While the percentage of federal student loan borrowers who are seriously delinquent has slightly subsided in recent months, it continues to remain decidedly elevated,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “We’re closely monitoring this population as they approach default status at 270 days past due, which could trigger involuntary collections.

“Once these actions begin, we anticipate that we may see an unprecedented shift in payment hierarchy where student loans are no longer at the bottom,” Raneri added.

Lenders seeking to stay fully abreast of the true risk of the federal student loan borrowers in their portfolios can leverage TruVision Premium Student Loan Attributes as part of their regular portfolio reviews.

TruVision Premium Student Loan Attributes can enable lenders to view details on student loan types, balances, and payment histories, helping them identify impacted consumers.

More details about TruVision Premium Student Loan Attributes can be found via this website.