Stephanie Pomboy: Will Student Loan Defaults Trigger The Next Credit Crisis?

Contagion already appears to be spreading...

Student loans are now officially back in repayment…and millions of American borrowers are becoming delinquent.

The credit scores of these millions are getting rated downwards, further impairing their ability to borrow more or service the debts they already have.

Could student loan defaults prove to be the fateful domino that triggers the next US credit crisis?

Macro analyst Stephanie Pomboy and I delved into this question in her latest bi-weekly Thoughtful Money livestream, which took place a few hours ago.

To hear what we concluded, click here or on the video below:

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Adam’s Notes: Stephanie Pomboy (recorded 5.28.25)

• Consumer Credit Stress: Student loan repayments, reinstated by the Trump administration, have spiked delinquencies (2.3 million borrowers dropped to subprime), risking $63 billion in consumer spending and amplifying credit card, auto, and mortgage defaults.

• Corporate Credit Risks: A $1 trillion maturity wall (2025-2027) threatens corporations, with overstated earnings inflating private equity leverage ratios, compounded by high interest rates and no Fed relief.

• Bond Yield Pressures: Persistent deficits ($2.5 trillion from the Big Beautiful Bill) and fiscal deterioration keep 10-year yields elevated (near 5%), with recession-driven deficit spikes limiting yield declines, per Scott Bessent’s focus.

• Banking Sector Vulnerability: Banks face $500 billion in unrealized treasury losses, weak commercial real estate, and rising consumer delinquencies, with