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The recent TransUnion report sent a shockwave through the lending and servicing community: borrowers with newly delinquent federal student loans are seeing their credit scores drop by an average of 60 points, virtually overnight. And the situation is worsening: 31% of federal student loan borrowers with payment due are now 90 days or more past due, the highest delinquency rate ever recorded.1
This isn’t just a data point. It’s a wake-up call
The impact is especially severe for Gen Z and Millennial borrowers, who make up most of the federal student loan population. These borrowers are already navigating high debt loads and limited credit histories. A sudden drop in credit score can mean losing access to affordable housing, auto loans, or even employment opportunities.
For federal student loan servicers, this moment demands more than compliance—it demands innovation. At ACI Worldwide, we believe the answer lies in meeting borrowers where they are: on their phones, in their wallets, and in control of their payment experience.
The credit crisis behind the numbers
The April 2025 delinquency rate of 31% is nearly triple the pre-pandemic rate of 11.7% in February 2020. With the U.S. Department of Education resuming collections on defaulted loans, the number of borrowers at risk continues to climb.2
A recent report from The Guardian confirms that over 5.8 million borrowers are now more than 90 days delinquent, and another million are at risk due to resumed collections.2 The consequences are steep, not just for borrowers, but for the servicers who are facing increased complaints, reputational risk, and regulatory scrutiny.
According to the US Department of Education, as of May 5, 2025, they have emailed more than 23 million borrowers, reminding them of their legal obligation to repay their loans as well as the benefits of making regular progress toward repayment.3
The digital wallet as a lifeline
This is where digital engagement becomes more than a convenience—It becomes a safeguard.
With ACI Walletron®, servicers can deliver branded billing passes directly into Apple Wallet and Google Wallet. These passes do more than look good; they work hard:
- Push notifications remind borrowers when payments are due
- One-tap access to payment portals reduces friction
- Mobile-first design aligns with how Gen Z and Millennials manage their finances
According to the 2024 ACI Speedpay Pulse Report, over 70% of Gen Z and Millennial consumers prefer to receive billing reminders via mobile notification or text. More than half say they’re more likely to pay on time when they receive a digital prompt.4
Delay My Payment: Empathy at scale
But what about borrowers who can’t pay right now?
That’s where Delay My Payment becomes a game-changer. This self-service tool allows borrowers to request a short-term deferral—within servicer-defined parameters—without needing to call an agent, wait on hold, or explain their financial hardship.
In a world where financial stress is often compounded by administrative friction, the Delay My Payment solution offers a lifeline. It’s not just a feature, it’s a philosophy: automation with empathy. Here’s why it matters:
- Preserves dignity: Borrowers don’t have to justify their hardship to a stranger. They can act discreetly and confidently
- Reduces friction: With just a few taps, borrowers can request a deferral, receive confirmation, and stay informed—all within a mobile-first experience
- Improves the outcome: By offering a structured, compliant way to pause payments, servicers can reduce delinquency rates and prevent borrowers from spiraling into default
- Lowers operational costs: Every self-service deferral is one less call to the contact center, freeing up agents to handle more complex or high-risk cases
- Builds trust: When borrowers feel supported—not punished—they’re more likely to re-engage, repay, and recommend
In today’s environment, where 31% of federal student loan borrowers are already more than 90 days delinquent, scalable solutions like delay my payment are no longer optional—they’re essential. This is how servicers can operate with empathy, not just in one-on-one interactions, but across their entire borrower base. It’s a smarter, more human way to manage risk, reduce churn, and build long-term loyalty.
Generational fit and its strategic impact
Let’s not forget: the average federal student loan borrower is in their mid-30s. This means they’ve grown up with technology, and they expect the same level of convenience and control in managing their finances as they do in ordering food, booking travel, or streaming content.
They’re digital natives, and they’re not picking up the phone to ask for help. They’re looking for self-service options that respect their time and privacy.
This is where traditional servicing models fall short: long hold times, clunky portals, and paper-based communications don’t align with how today’s borrowers live and manage their money.
That’s why ACI’s wallet-based engagement strategy isn’t just a feature; it’s a foundation for modern servicing. It reflects a deep understanding of generational expectations and payment behaviors.
Backed by insights from the 2025 ACI’s Speedpay Pulse Report and other broader generational payment trends, the message is clear: Digital-first engagement isn’t just a nice-to-have—it’s a must-have. It’s how servicers can:
- Build trust with younger borrowers
- Increase on-time payments
- Reduce operational costs
- Future-proof their servicing strategy
In short, it’s not just about keeping up, it’s about leading the way.
The bottom line
A 60-point credit score drop isn’t just a borrower problem—it’s a servicer problem. It leads to complaints, reputational risk, and regulatory scrutiny. But with the right tools (mobile wallets, self-service deferrals, and omnichannel engagement), servicers can turn this moment of risk into a moment of leadership. Let’s meet borrowers where they are. Let’s help them stay current. And let’s do it in a way that’s fast, flexible, and future-ready.
Connect with Darcy on LinkedIn for regular updates on payment innovation opportunities for lenders, and head here to learn more about ACI Speedpay.
Sources:
1 TransUnion article, July 10, 2025
2 One in three student loan borrowers risk default as delinquency rates soar. The Guardian. June 2025
3 US Department of Education article. July 9, 2025
4 2024 ACI Speedpay Pulse Report
ACI Speedpay 
Darcy Locke is a trusted advisor for the electronic billing and payments team at ACI Worldwide, focusing on consumer lending markets. She has a bachelor’s degree in business administration and 24 years of professional sales experience, 18 of which are direct B2B. Known for building strong relationships and excelling in consumer finance, Darcy uses her deep expertise in electronic bill payments to provide exceptional customer service and continuing education within the industry.
