Millions of student loan borrowers could face a wake-up call Monday as the Department of Education resumes collecting on school loans. The restart of collections comes as data from a recent analysis shows delinquency rates among people with student debt are at an all-time high. 

After nearly five-years since the U.S. government first paused federal student loan payments and interest accrual as a temporary relief measure during the COVID-19 pandemic, May 5 marks the first day the Education Department's  of Federal Student Aid (FSA) restarts collections on defaulted federal student loans. 

Referrals for collection had been put on hold since March 2020 because of the pandemic. 

"The level of concern here really depends on the reasons a borrower has not paid their federal student loans. If they don't have the capacity, they may be overstretched," Michele Raneri, vice president and head of research at TransUnion, said in a statement. "They may not know they have to pay them, may not be able to find the information on how to do so, or may not have a willingness to pay for one reason or another," she said.

Still, one in five borrowers is "seriously delinquent" or has a past-due payment of 90 days or more, according to a new analysis by TransUnion, one of the three major credit bureaus. The analysis looks at the percentage of student loan borrowers at risk of default and the impact that has on their credit scores.  

Those in default face an uphill battle: Failing to make a payment means  withhold portions of Social Security benefits and tax refunds and garnish wages. Defaulting on a loan can also tank your credit score, which in turn can make it more difficult to obtain a loan in the future.

Read on for more information about the state of student loan borrowing as default collections resume.

Millions at risk of defaulting

The credit bureau's findings underscore how student loan repayments have struggled to get back on track since COVID-19. Payments on student loans were  in March 2020 and didn't  until October 2023. 

For borrowers across the U.S. who didn't have to worry about making payments for years, the resumption of student loan payments presented a challenge for many individuals

Out of the 19.6 million student loan borrowers, TransUnion found that roughly 20% are at risk of defaulting. The figure — which TransUnion estimates could be much higher — outpaces the credit bureau's previously recorded all-time high of 15.4% in 2012. 

For its analysis, TransUnion looked at those susceptible to being 90-days past due on their loans. That winnowed the field of borrowers from roughly 42 million to a total of 19.6 million borrowers. Excluded from this report were people in deferment or forbearance, as well as private student loan borrowers.

As the federal student aid  outlines, loan servicers can report borrowers who are behind on their loans for 90 days or more to the national credit bureaus. 

On average, people who faced default lost an average of 63 points, TransUnion found, although those with higher credit scores were at risk if losing much more. Those in "super prime" credit territory — defined by a spokesperson for TransUnion as a credit score of 781 or higher — saw an average credit score decline of 175 points as a result of impending student loan defaults.

"Borrowers can review their credit report to see what loan servicers are reporting," Raneri told CBS MoneyWatch. "This can also help people find who to contact if they have a loan they didn't expect to see."

To minimize student loan defaults, prioritizing income-driven repayment (IDR) plans — which tabulate the monthly payment based on what someone makes and their family size — along with better outreach to borrowers and automation could go a long way, Pew Charitable Trusts says in an online .

"Data-sharing could also be used to automatically enroll borrowers into an IDR plan if they fall severely behind on payments, a move that could significantly curb future defaults by connecting borrowers with affordable payments,"  Regan Fitzgerald, senior manager; Brian Denten, officer; and Ilan Levine, senior associate at Pew's Student Loan Initiative.

All told, the nation's nearly 43 million student loan borrowers hold a collective $1.6 trillion in debt, to the Education Department. Agency  indicates that over 5 million of these borrowers have not made a monthly payment in over 360 days, while only 38% are on track with their repayment plans.

Secretary of Education: Long overdue

Student loan collections were upended during the COVID-19 pandemic. In March 2020, during President Trump's first term in office, the Education Department paused student loan payments and knocked interest rates to zero to give borrowers some breathing room.

When former President Biden took office in 2021, he extended the loan repayment deadline multiple times until passed a law directing payments to resume in October 2023. The Biden administration made several attempts to deliver a student loan debt relief during his time in office, but his efforts were stymied by courts.

While student loan repayments resumed over a year and a half ago, Monday, May 5, is the first day since March 2020 the Department of Education is collecting repayments from borrowers who have struggled to meet their payment deadlines. For U.S. Secretary of Education Linda McMahon, the return is long overdue.

"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," said McMahon in an April . "The Biden Administration misled borrowers: The executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers."