Millions of Americans are grappling with a surge in student loan defaults, a trend that has accelerated since federal payment pauses ended in the fall of 2024. According to an Associated Press analysis, the number of borrowers with defaulted student loans jumped by more than 4.2 million between April 2025 and March 2026.
This increase includes borrowers who fell behind on payments as they resumed after the pandemic-era freeze. Hundreds of thousands more are months behind on their payments, and experts warn that another wave of defaults may be imminent. The situation is compounded by the government's dismantling of its most affordable income-driven repayment option, the SAVE plan, which the Education Department states is part of an effort to streamline a complex system.
Borrowers officially enter default after nine consecutive months of missed payments. The consequences can be severe, impacting credit ratings and leading to the debt being sent to collections. Federal agencies can garnish wages and Social Security payments from those in default. A Moody's Analytics report this spring indicated that such garnishments are likely to begin within the next year, potentially creating an economic headwind.
Borrower Experiences
For many, the return to repayment has been a shock. Ashley Dreahn, who pursued further education with the hope of a career change, found herself in default after believing her student loans had been discharged in bankruptcy. By 2022, facing job loss and unexpected expenses, she filed for bankruptcy. However, she later discovered her student loans had ballooned to nearly $95,000 with interest, and she was required to restart payments. "I absolutely broke down," Dreahn, 40, stated.
Dreahn's experience highlights the opaque nature of student loan acquisition. She recalls borrowing heavily for her education, with little explanation of the long-term implications. "You just kind of trust these advisers and trust these financial aid people that this is what you’re supposed to do," she said.
Barbara Howaniec, a 63-year-old psychiatric nurse practitioner, also faces significant financial strain. After graduating in 2001, she borrowed approximately $62,000 for her master's degree. Despite two decades of payments, she still owes around $67,000. She had anticipated loan forgiveness after 25 years under an income-based repayment plan, but received notification that her repayment schedule had changed, requiring 355 additional payments.
"I had already paid what I had borrowed. I’m like, no, I’m not going to pay anymore," Howaniec said. As a self-employed individual, she is not concerned about wage garnishment.
Shannon Khan, a 46-year-old mental health worker, has paused her payments for two months while exploring her options. She was transitioned from the SAVE plan to another income-driven repayment plan, which increased her monthly payment significantly and extended her repayment period. "It’s just a bunch of chaos and confusion," Khan commented.
The Surge in Defaults
The current wave of defaults began after the pandemic relief measures, which suspended payments until 2023, followed by a grace period that ended in fall 2024. As of the AP analysis, approximately 9.5 million borrowers, more than one in five, are in default. This number surpasses the previous record of 8 million borrowers in default in December 2019.
Federal data also indicates that 870,000 borrowers have loans that are 181 to 270 days late, placing them on the brink of default. Borrowers attending for-profit schools show a higher delinquency rate, with 33% being at least 90 days late on payments, more than double the rate seen at public schools.