Student loans and credit card bills are pushing Americans into collections across the country
Americans are struggling to keep up with their monthly bills.
Affordability was top of mind for voters in the midterm elections, and new data from the Urban Institute illuminated just how pressing an issue it is. An analysis from the think tank, using US Census Bureau and credit bureau data, showed that 23.5% of Americans with a credit history have debt in collections, with a median amount of $2,913.
And some corners of the country are struggling more with outstanding debt than others. In rural Jim Hogg County in south Texas, over half of those with a credit history have debt in collections. Who holds debt is also unequal: The Urban Institute found communities of color — zip codes where at least half of the population is non-white — were around 50% more likely to have debt heading to collections than white communities.
The time it takes to go to collections varies by product. A borrower behind on credit card payments would typically go to collections four to six months after a missed payment, while medical debt is around three to six months. The analysis said that the median credit card delinquent debt is $680, compared to $1,492 for those behind on medical bills.
The collections process for student loans depends on whether the loan is federal or private. A federal student loan typically defaults after 270 days, and a borrower would then have the opportunity to work with their servicer to rehabilitate their loan and return to good standing.
The Education Department paused involuntary collections on federal student loans, including the consequences of wage garnishment and the seizure of federal benefits, while it implemented its repayment overhaul. It has not specified when the pause will lift. Private student loans, meanwhile, typically default after 180 days of nonpayment and are subject to standard collection procedures.
Urban Institute’s data showed that 16% of federal and private student-loan borrowers were behind on payments in 2026, with a median defaulted amount of $5,078.
Across the board, Americans owed $18.8 trillion in debt as of the second quarter of 2026, according to the New York Federal Reserve; 4.7% of debt had transitioned into some form of delinquency at the end of June, with 10.6% of student loan debt 90 days or more delinquent.
From inflation to rising grocery prices, Americans’ wallets have been strained, leading some to pick and choose which bills to prioritize. High interest rates on products like credit cards and student loans also deter borrowers’ ability to stay on top of their payments. For example, Susan Cannon, a 73-year-old, previously told Business Insider that she has nearly $40,000 in debt spread across 19 credit cards with interest rates ranging from 12% to nearly 35%.
“I’ve always tried to put some in savings, but it’s gotten to where it’s all going toward interest,” Cannon said. “I just cannot get ahead.”