Student loans pose a fresh threat to U.S. consumers, Apollo says

[Mortarboard on heap US dollar banknotes and DEBT label with blue background.]

Apollo’s chief economist Torsten Slok is warning that the resumption of student loan payments could have a significant impact on U.S. consumers’ financial health, particularly through deteriorating credit scores.

In a recent note to investors, Slok highlighted how missed student loan payments can trigger steep declines in FICO scores, especially for borrowers with otherwise strong credit histories.

Data from Apollo shows that households with scores above 760 see an average drop of 171 points when a student loan becomes delinquent. Such a decline can quickly shift consumers from excellent to subprime credit categories, raising borrowing costs across mortgages, credit cards, and auto loans.

The broader scale of the issue underscores its potential economic ripple effects. Roughly 45 million Americans carry student loan debt, and about 11 million—nearly a quarter of all borrowers—are either in default or more than 90 days behind on payments. With repayment obligations now restarting after pandemic-era forbearance, the likelihood of rising delinquencies is front of mind for policymakers and investors alike.

Slok’s takeaway is that student loan payments represent a renewed headwind for the U.S. consumer, adding pressure to household budgets and potentially weighing on spending in the months ahead.

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