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Millions of Americans are seeing their credit scores suffer now that the U.S. government has resumed referring missed student loan payments for debt collection.After 90 days of non-payment, student loan servicers report delinquent, or past-due, accounts to major credit bureaus, which use the information to recalculate the borrower’s score. Falling behind on loan payments therefore can affect an individual’s credit rating as severely as filing for personal bankruptcy.A lower credit score makes it harder or more expensive to obtain car loans, mortgages, credit cards, auto insurance and other financial services at a time when inflation, high interest rates, and layoffs have strained the resources of some consumers.The Federal Reserve Bank of New York reported that in the first three months of 2025, 2.2 million student loan recipients saw their scores drop by 100 points, and an additional 1 million had drops of 150 points or more.Declines that steep may mean the difference between a manageable credit card interest rate and an unmanageable one, or approval or rejection of an application to rent an apartment.The U.S. Department of Education paused federal student loan payments in March 2020, offering borrowers relief during the economic chaos of the coronavirus pandemic.Though payments technically resumed in 2023, the Biden administration provided a one-year grace period that ended in October 2024. Last month, the Trump administration restarted the collection process for outstanding student loans, with plans to seize wages and tax refunds if the loans continue to go unpaid.According to the Federal Reserve Bank of New York, about 1 in 4 people with student loan accounts were more than 90 days behind on payments at the end of March.Kat Hanchon, 33, who works in marketing and higher education in Detroit, was one of them. Hanchon said her score dropped by 57 points as a result of her loans falling delinquent this year. That put her score below 600, or subprime.When Hanchon received her statement from her loan servicer, her expected monthly payments were higher than before the pandemic-era pause, even though she had enrolled in a repayment plan that takes a borrower’s full financial situation into account.“They said I now have to pay $358 per month,” she said. “I’m not going to be able to pay that. But I’m not unusual in the world we’re living in right now.”Hanchon said she’s had to prioritize paying medical expenses for a dental crown, a root canal, and an endoscopy before she’ll be able to consider putting money toward the loans. While her housing situation is secure for the moment, she worries about the annual percentage rate for her credit cards fluctuating.Lenders, landlords, credit card companies, employers and utility companies all look to consumers’ credit scores to gauge the likelihood of borrowers being able to make regular payments. A higher score typically results in lower interest rates and more favorable loan terms, while a lower score makes it harder to access credit.The Education Department has said borrowers should receive bills from lenders three weeks before any payments are due, but some people have reported that they have not been notified.Wait times for calls with loan servicers have been high, and layoffs at the Department of Education have also likely contributed to delayed service, consumer advocates say.Dom Holmes, 28, who works for a nonprofit in Manheim, Pennsylvania, said he woke up in early May to find his credit score had dropped 60 or 70 points overnight.“All of a sudden I was delinquent, even though I’d never received notice,” he said.Holmes has begun the process of appealing the reduction of his credit score, he said. He’s been considering a move for professional reasons, and added that he’s concerned it could be tough to rent a place to live with his score as it stands.“I’m at the ideal age where I should be starting a family and buying a home,” he said. “When you destroy me financially, what are the chances I’m able to do that and that’s viable for me?”Holmes, who was the first person in his family to graduate from college, said he still has some outstanding Parent Plus loans, which he intends to keep paying down so that his parents’ credit scores aren’t affected.He graduated in 2019, shortly before the pandemic, and said he can see how his generation might have difficulty paying off the debt.“Right as I was entering the workforce, the world really stopped,” Holmes said. “Things were really bad for a lot of people for a long time. We’re still coming out of that. And all of a sudden, the switches got turned back on overnight.”Kevin King, vice president of credit risk at data and analytics company LexisNexis, said he expects the effects of the resumed student loan collections to begin rippling through the U.S. economy in the coming months.“There were a number of years where it was probably a bad financial strategy to be making student loan payments,” he said. “A lot of consumers were confused as various government (policies of forgiveness) were passed and overruled.”King predicts that student loan payments will move higher in the so-called “payment hierarchy,” or the order in which consumers make payments, since the government plans to use “levers to compel” such as wage garnishment and the seizing of tax refunds.“Which bill do you pay first, second, and not at all?” King said. “Historically, student loans are really far down the list. But the government’s being pretty aggressive here in pursuing payment activity in a way that may shift the hierarchy. Consumers might be more willing to go delinquent or default on something like a credit card or installment loan.”The Federal Reserve of New York study also found that borrowers ages 40 and older were most likely to be delinquent on their loans.Andrew McCall, 58, of Boise, Idaho, said he has about $30,000 remaining in outstanding loans from earning his computer science degrees. He said he can’t afford his monthly payments, which are in the $250-300 range, and worries what a hit to his credit score might mean for all areas of his life.“The fact that this economy is driven by debt to begin with causes my score to be paramount no matter what financial decisions I’m making, outside of going to the grocery store,” he said. “My car, my house Your credit rating becomes a social stratifier.” The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism. Cora Lewis, Associated Press
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A decade ago, China had just a few hundred pharmaceutical drugs actively in development. Today, China has thousands of drugs in active development and is continually increasing investment to make even more. This transformation was not, however, a foregone conclusion: China faced incredibly high barriers to growing its pharmaceutical industry including weak research investment and a highly fragmented market of small drug development firms. However, through engineering an environment conducive to pharma innovation, China went from developing 2% of all drugs globally to 25%. Over the same period, the U.S. decreased its share from 45% to 36%, according to Evaluates internal data. A boost in funding and regulatory changes opened the door, but access to the right talent has taken China across the threshold into a pharmaceutical golden age. Scientists from China and other parts of Asia used to come to the U.S. to work for the biggest drug companies and with the brightest minds. Now, many experts are heading East to fill Chinas labs, and this return began well before the current administration took office. The result? A huge increase in the quality and quantity of novel Chinese medicines in development. Licensing deals To understand the threat China poses, look to major drug companies product portfolios. Increasingly, instead of acquiring homegrown innovations, pharma giants including Novo Nordisk, Merck & Co., AstraZeneca, and most recently Pfizer are entering into high-profile licensing deals with Chinese firms. In 2024, 31% of big pharma licensing deals involved a Chinese biotech and that number is projected to grow this year. China now offers a dizzyingly abundant source of innovative, high-quality therapies atby pharma standardsreasonable prices. Could the U.S. pharmaceutical industry, long a shining example of innovation on the world stage, soon be eclipsed? While Chinas pharma industry is close to becoming the world leader, the U.S. still holds key advantages to maintain dominance. Where China Has The U.S. Beat There are three hot spots of innovation in next-generation therapies where Chinas lead is becoming pronounced: Bispecific Antibodies (Bispecifics): Engineered antibodies that bind to two different targets simultaneously, offering a novel way to fight cancers. They garnered billions of dollars in sales last year and 56% of those currently in development originated in China, according to Evaluates internal data. Antibody-Drug Conjugates (ADCs): These antibodies deliver a highly potent chemotherapy drug directly to cancer cells. The ADC market is projected to reach $50B by 2030 and 55% of those currently in development originated in China. Chimeric Antigen Receptor T-Cells (CAR-Ts): T-cells modified to recognize and kill cancer cells. The CAR-T market is expected to reach over $21B by 2030 and 51% of therapies currently in development originated in China. GLP-1s Notably, despite the increasingly crowded nature of the obesity and diabetes space, Evaluates internal data shows 46% of GLP-1 therapies in development are from Chinese sponsors. Merck, for example, made its first move into the obesity space not by developing its own drug but by licensing a Chinese GLP-1 pill late last year. Questions remain, though, about whether Chinese players can catch Western pharma leaders which have a huge head start in the obesity space. Realistically, its unlikely that the U.S.or any other countrywill beat China in these top three areas, though many of these Chinese drugs will be acquired by U.S. companies before they reach the market. Despite Chinas formidable drug development pipeline, the nation still faces outsized challenges around financing innovative and late stage trials, multiple competitors racing to patent highly similar versions of a single drug, and pricing pressure from generic versions of drugs whose patents have expiredall of which might stall Chinas influence. U.S. Pharmas Secret Weapons While China ramps up novel cancer treatments, the U.S. remains a powerhouse with the infrastructure, academic institutions, and regulatory systems that will ensure it continues to play a critical role in the global market. While the U.S. does not have an overwhelmingly large global share of the development of any kind of drug, it still has a significant portion of many of the largest, and most exciting types. These include: Radiopharmaceuticals: Radioactive molecules injected into the body for both targeted cancer irradiation and medical imaging. Theyre already a multi-billion-dollar market, and the U.S. controls 40% of those currently in development. Traditional Small Molecules: The foundation of medicine (Lipitor is an example), these drugs are still extremely widely used and the U.S. controls 37%of those currently in development. Discovery advantages Beyond dominating in these two treatment types, the U.S. has a few key advantages that will be its saving grace in the competition for biopharma dominance. The United States ace-in-the-hole is making initial scientific discoveries. It is still the best at finding new disease processes and ways of designing drugs while Chinas strength is iterating on already-established successes. Take the aforementioned ADCs and CAR-Ts: these innovations were discovered in U.S. labs and China has run with tweaked versions. While China is starting to break ground on developing new biology, the U.S. still has the drug discovery edge. Secondly, U.S. investors are willing to take risks. While the Chinese state is working to create a strong environment for biotechs, private investors in China are more risk-averse than their Western counterparts. So, there is opportunity in the U.S. to support potentially high-growth areas, such as cell and gene therapy. Thirdly, dont underestimate manufacturing. Since the announcement of potential tariffs hitting the pharma industry, a number of large drug companies have announced huge investment in their U.S. manufacturing sites. Many of these were almost certainly in the cards already but more investment in the U.S. will help bolster the wider industry. The Biosecure Act also supports this effort, enforcing stricter regulations on the supply chain. Innovation insurance Finally, dealmaking is innovation insurance. U.S. big pharma is well used to sourcing innovation and drug development programs through dealmaking, so one can argue that simply extending their gaze East to draw from the new pool in China is not such a shift anyway. Many, if not most, of the next generation therapies are likely to be acquired from abroad before completing their late-stage trials in the U.S. and reaching the market. Continued international licensing will ultimately benefit the bottom lines of American companies. Chinas genie is out of the bottle and there is no doubt that the countrys ability to develop innovative drugs will continue to thrive. As the landscape diversifies, both countries will play crucial roles in advancing pharmaceutical innovation. Both the U.S. and China hold unique advantages; now is the moment America can reinvest in theirs to come out on top.
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Hello and welcome to Modern CEO! Im Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning. Modern CEO is coming to you today from the Cannes Lions International Festival of Creativity. What started 60 years ago as an advertising awards program has evolved into an annual gathering of media and marketing executives that is increasingly attracting business leaders from different industries, including CEOs. Any CEO who wants to grow, innovate, and stay culturally relevant will benefit from being here, says Shelley Zalis, founder and CEO of the Female Quotient, a community of women in business that hosts a lounge at the event. Tony Capuano, president and CEO of Marriott, concurs: Cannes Lions is where the worlds most powerful creative conversations happenonstage, over coffee, and in every meeting along the Croisette [Canness main street], says Capuano, who is speaking on a panel with former NBA star Carmelo Anthony at Stagwells Sport Beach activation and moderating a session on food and travel at the JW Marriott. For me and our team, its an essential moment to tap into the energy of global culture, explore how brands are shaping behavior, and build partnerships that help us connect more meaningfully with travelers around the world, he adds. Cannes: a creative compass Part of the appeal of the confab is the robust presence of technology giants that are dominant marketing platforms (Alphabets Google Services segment, for example, which includes revenue from search, YouTube, and other ad sources, saw 2024 revenue climb 12%, to $304.9 billion), developers of the generative artificial intelligence (gen AI) tools that are transforming content creation, or both. Amazon, Canva, Meta, IBM, Microsoft, and Salesforce are among the tech companies popping up in lounges and meeting spaces, and the festival is honoring Adobe CEO Shantanu Narayen as its Creative Champion of the Yeara new award that seems designed to ensure the participation of a major tech CEO at the proceedings. The impact of gen AI on creativity will be a major theme this year, attendees say. The event also offers an opportunity for business leaders to discuss broader issues, such as political and economic risk. Judy A. Smith, founder and president of strategic advisory firm Smith & Company, is speaking on a panel about building and protecting a brand in uncertain times. Smith, who is attending Cannes Lions for the first time, says she sees value in being able to meet and hear from so many decision-makers in a short period of time. Its a great way to stay on top of emerging trends and see whats shaping the future of the industry, she says. To be sure, those who recommend Cannes Lions as part of the CEO conference circuit are firm believers in the power of creativity and creative leadership in corporate ranks. In a world shaped by perception, confidence, and social connection, creativity is not a department. Its a leadership tool, says Claudia Romo Edelman, who will unveil the latest edition of her We Are All Human Foundations Hispanic sentiment research in Cannes. If youre serious about driving change, theres no better place to sharpen your vision. Is Cannes a must-do for you? Should CEOs outside the media and tech ecosystem make the trip to Cannes? You can decide for yourselves: Modern CEO will deliver a few extra dispatches from the event this week with insights and takeaways from panels, interviewsand maybe a few parties. And if you have questions you want me to ask the CEOs I meet, send them to me at stephaniemehta@mansueto.com, and Ill try to work the answers into my newsletters. Listen, watch, and read more: Postcards from Cannes What small businesses can learn from Cannes Lions The Brand-New World podcast explores AIs mastery over the world of advertising Why Unilever won Creative Marketer of the Year at Cannes Lions last year
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