Millions of Americans are suddenly facing dramatically lower credit scores from delinquent student loans, making it tougher for them to secure housing, insurance, car loans, even employment at a vulnerable time for the U.S. economy.
Credit scores dipped by more than 100 points for 2.2 million delinquent student loan borrowers, and 150 points or more for more than 1 million in the first three months of 2025, according to an analysis by the Federal Reserve Bank of New York.
— from “Millions of Americans hit with bad credit after missed student loan payments” by Abha Bhattarai, in the The Washington Post, May 25, 2025.
As if things weren’t bad enough already for young people trying to start a life.
This month the federal government restarted collection efforts for defaulted student loans. According to news reports, the government will resume seizing wages, tax returns and Social Security payments this summer, making the stakes even higher for the 1-in-4 student debtors who are more than 90 days behind on repayments.
For the past 30 years or so, our education system has been urging high school graduates to continue their education by enrolling in college. Data was shared in the media and elsewhere, showing that college graduates earn more money during their lifetimes than non-graduates. During that same period, Big Finance stepped up to provide convenient student loans that didn’t need to be repaid until after graduation.
Total outstanding student loan debt — measured in inflation-adjusted dollars — has increased from approximately $187 billion in 1995 to over $1.7 trillion by 2024… a 900% increase. This represents one of the most dramatic expansions of any major debt category in American history. And unlike other forms of debt, student loans are generally not dischargeable in bankruptcy, making them particularly burdensome for borrowers who struggle financially.
The student debt crisis represents perhaps the most severe example of cost inflation in a essential service over this period.
Also, during that same period, home prices and rental rates in America began to climb. While general inflation (CPI) increased by roughly 80-90% between 1995 and 2025, home prices rose by around 350% … about 3-4 times faster than the general price level of goods and services, and also about 3-4 times faster than wage growth.
These are tough times, for younger adults.
Apparently, the universities and the financial industry are okay with this situation?
A couple of conversations took place in Pagosa Springs, on May 20, that also relate to tough times ahead for young adults, where housing is concerned. The two discussions took place in two different locations, with two different groups of participants.
The second meeting took place at Town Hall. More about that meeting, later.
The first meeting on May 20 was hosted by the Colorado Division of Housing, and took place at the PLPOA administration building.
I participated in the meeting as a local news editor, and also as a Pagosa Area Water and Sanitation District (PAWSD) board member.
Disclosure: This editorial reflects only my own personal opinions, and not necessarily the opinions of the PAWSD board and staff.
The PAWSD board has, for the past few years, been granting waivers of certain fees for housing projects aimed at working families. Those waivers are funded by PAWSD customers.
The national student debt crisis and the national housing crisis, both plainly evident in 2025, were generated in part by past government decisions and policies.
The current PAWSD board feels that governments should help to mitigate the housing crisis, on behalf of the community.
The May 20 gathering had been organized by Shirley Diaz, the Housing Development Specialist for the Division of Housing (DOH), Southwest Region, and included representatives from Archuleta County, the Town of Pagosa Springs, Archuleta County Housing Authority, Pagosa Springs Community Development Corporation (CDC), Habitat for Humanity, Archuleta Housing Corporation, Colorado Housing and Finance Authority, and the Office of Economic Development and International Tourism.
In other words, government, and non-profits. (And one media outlet.)
No one in the room represented the construction industry, or the banking industry, or the real estate industry — the three industries that actually build, finance, and market homes in Archuleta County.
Perhaps that was an oversight?
Emily Lashbrooke, Executive Director of the CDC, offered the first comment, about the assistance that has been coming from DOH.
“I gotta say, when the CDC took on housing, and the first round of [government] funding opened up for Prop 123, our project was judged on the basis that we had absolutely zero experience in building housing.”
Polite laughter in the room.
“And I will tell you, I met with both of these individuals and begged them to just give us a chance, and that we would do this project.”
‘This project’ being ten new homes in the Trails/Chris Mountain subdivision.
“And we have done it. On time and on budget. And I can’t thank you enough, because you have helped us to unlock the key to workforce and affordable housing. Thank you!”
The ten-unit project was coordinated by CDC, but the actual construction was handled by local contractor BWD Construction. On time and on budget.
Because of the subsidies for the project provided by the Department of Local Affairs through Prop 123 funding, the homes must be sold to households that earn less than the average income in Pagosa Springs.
The unpleasant fact that the CDC discovered, after the ten homes were built, is that the workforce families and individuals who earn less than the average income in Pagosa Springs cannot easily obtain financing for a $320,000 single-family home. According to Ms. Lashbrooke, the CDC has sold four of the ten homes, and has a waiting list of families who qualify for the homes by income level, but do not qualify for mortgage… due to lack of down payment… or poor credit scores… or other issues related to financing.
So the non-profit CDC is now faced with having to make loan payments on six unsold $320,000 homes, unless they can locate, very soon, buyers for the rest of the finished homes.
As Ms. Lashbrooke noted, the CDC has unlocked one of the keys to building workforce and affordable homes.
But there was another locked door inside the first door, to which the key has not yet been found.