Student Loan Debt eclipses Credit Card Balances in U.S., Reaching $1.65 Trillion Milestone

New York, December 9, 2025  Total student loan debt has officially surpassed all outstanding credit card balances nationwide, climbing to $1.65 trillion in the third quarter of 2025, according to the latest data from the Federal Reserve Bank of New York. This figure edges out credit card debt, which stood at $1.23 trillion over the same period, marking a gap of more than $420 billion and underscoring the unique weight of education-related borrowing in the nation's household finances.

The New York Fed's Household Debt and Credit Report, released earlier this month, highlights a steady uptick in student loans even as broader consumer debt trends show mixed signals. Student debt, which has ballooned over decades due to rising tuition costs and stagnant wage growth for young graduates, now represents the second-largest category of household indebtedness behind mortgages.

"This divergence reflects deeper structural issues in access to higher education," said an economist at the Fed, noting that delinquency rates on federal student loans hovered at 9.4% in Q3, up from earlier in the year. Cross-referencing with Federal Reserve data, credit card balances have indeed grown—rising from $1.21 trillion in Q2 to $1.23 trillion by quarter's end—but at a slower pace than student obligations, which increased by $10 billion in the same timeframe. Forbes Advisor corroborated these numbers in a recent analysis, attributing the credit card surge to inflation-driven spending on essentials, yet emphasizing that student debt's scale remains unmatched among non-mortgage consumer loans.

Trading Economics echoed the Fed's findings, reporting the exact figures and projecting continued growth if policy interventions like loan forgiveness remain stalled under the current administration. The milestone comes at a precarious time for borrowers. With interest rates holding steady and whispers of a potential recession in early 2026, experts warn that the "student debt cliff"—a wave of repayments resuming post-pandemic forbearance—could exacerbate defaults.

A LendingTree study from earlier this year projected average cardholder debt at $7,321 per person with balances, but for student loans, the per-borrower average exceeds $38,000, disproportionately affecting younger demographics like Gen Z and millennials. Advocacy groups are sounding alarms. "This isn't just numbers on a balance sheet; it's a barrier to homeownership, family formation, and economic mobility," said Laura Keeley, policy director at the Institute for College Access & Success, in a statement reacting to the Fed report. Meanwhile, some economists point to silver linings: mortgage originations ticked up slightly in Q3, suggesting a resilient housing market that could offset some debt pressures. 17GEN4.com