Defaults on student loans surge following end of pandemic-era freeze

Key Points:

• The number of borrowers with defaulted student loans in the U.S. surged by over 4.2 million between April 2025 and March 2026, driven by the resumption of payments after the pandemic-era freeze ended in late 2024.
• Many borrowers, like Ashley Dreahn, face overwhelming debt due to loan servicing confusion, unexpected payment increases, and the rare discharge of student loans in bankruptcy, which she mistakenly believed had cleared her debt.
• Changes to federal repayment plans, including the dismantling of the affordable SAVE plan, are causing higher monthly payments and confusion among borrowers, leading some to stop payments altogether.
• Defaulting on student loans damages credit scores, can result in wage garnishment, and creates significant financial and emotional hardship for millions, with about 9.5 million borrowers currently in default.
• Efforts to help borrowers manage or forgive loans, such as Public Service Loan Forgiveness, remain complex and difficult to navigate, leaving many struggling to balance basic living expenses with mounting debt obligations.