In the first quarter of 2025, the pattern of debt among American households has significantly changed. While credit card and auto loan balances have levelled off, student loan debt is rising sharply, marking a shift in how consumers are borrowing.
The Federal Reserve Bank of New York’s latest report shows that total household debt climbed slightly to $17.69 trillion, an increase of $184 billion from the previous quarter. However, when looking closely, the type of debt driving that change tells a different story.
Credit Card Debt Flatlines
Credit card balances stayed at $1.12 trillion in the first quarter of 2025, showing no significant growth. This pause comes after a period of consistent increases and may signal that consumers are reaching a limit or are becoming more cautious.
High interest rates are a likely reason. With credit card APRs averaging more than 20 percent, many borrowers are focusing on paying down existing debt instead of adding new charges. Households are also facing rising costs on essentials, leaving less room for discretionary spending.
Auto Loans Also Cool Off
Auto loan balances remained unchanged at $1.61 trillion. This may reflect fewer new car purchases and higher vehicle prices, along with increasing financing costs. High interest rates have pushed many potential buyers to hold off on upgrading or purchasing new vehicles.
The auto loan market’s slowdown also ties back to supply chain issues and the lingering effects of the pandemic, which disrupted production and raised prices.
Student Loan Debt Heats Up
In contrast, student loan debt rose by $21 billion, pushing the total balance to $1.60 trillion. That’s the largest increase in student loan balancevs since 2013.
This spike follows the end of the federal student loan payment pause, which lasted more than three years. During that time, millions of borrowers were not required to make payments. Now, with repayments restarting, balances are recalculated, and the overall debt is growing once again.
New student borrowers entering college this year have also contributed to the increase, with more families relying on federal and private loans to cover rising tuition and education-related expenses.
Delinquency Rates Climbing
The report also highlights a rise in delinquencies. In the first quarter of 2025, 3.2 percent of credit card accounts and 2.3 percent of auto loans were at least 90 days past due.
Student loan delinquency data is expected to rise as well in the coming months now that payments have resumed. Many borrowers may find it difficult to adjust their budgets after years without payments.
What This Means for Consumers
The changing debt patterns suggest that Americans are becoming more cautious with their spending. But they also indicate that education-related borrowing may place new pressure on household finances.
If you’re managing multiple forms of debt, it’s a good time to:
- Reassess your repayment strategy
- Consider switching to lower-interest financial products
- Explore available relief or income-driven repayment plans for student loans
Borrowers with federal student debt can learn more about repayment options, forgiveness programs, and support services through studentaid.gov.
A New Financial Landscape
Experts believe that while total household debt isn’t growing at alarming levels, the increase in student loans is something to watch closely. If wages don’t rise in line with education costs or if job markets tighten, more borrowers could fall behind on their loans.
This shift in borrowing behavior highlights how economic pressures, interest rates, and government policies shape the way Americans take on debt. As credit card and auto loan growth slows, the rise in student loan debt is creating a new financial landscape—one that will affect families, lenders, and policymakers alike.