Record Number of Americans Have Defaulted on Student Loans

Key Points:

• Student loan defaults in the U.S. have surged to record levels, with about 9.5 million borrowers—one in five federal student loan holders—now in default, meaning they are over nine months behind on payments.
• The increase follows the end of pandemic-era payment suspensions and a one-year buffer period provided by the Biden administration, which prevented defaults until fall 2024.
• Currently, $233.3 billion of the $1.7 trillion in federally backed student loans are in default, posing serious consequences such as wage garnishment, though involuntary collections have been temporarily paused.
• The Trump administration has eliminated the most generous income-driven repayment plan, SAVE, forcing millions of borrowers to potentially pay more monthly and reducing repayment options to just two plans starting this month.
• Advocates warn that rising student loan bills amid broader economic pressures are causing increased financial distress and despair among borrowers, with another wave of defaults anticipated.