Record Number of Federal Student Loan Borrowers in Default as Payments Resume
Around 9.5 million federal student loan borrowers are in default, the highest level on record, after the pandemic payment pause ended and policy changes reduced repayment options.
The number of borrowers who have fallen behind on federal student loans has risen sharply since payments resumed following a pandemic-era pause. The Department of Education reports that about 9.5 million people—roughly one in five federal loan holders—are now in default, meaning they are at least nine months overdue.
The default surge began after the temporary suspension of payments, which lasted through 2023 and a one-year buffer provided by the Biden administration, ended in the fall of 2024. Data from the Office of Federal Student Aid show the default count climbing from 5.3 million to 9.5 million, with $233.3 billion of the $1.7 trillion federal loan portfolio in default.
Policy changes under the current administration have eliminated the Saving on a Valuable Education (SAVE) income-driven repayment plan, leaving many borrowers with higher monthly payments. New borrowers now choose between a standard plan and a single income-driven option, a simplification the Education Department says addresses a “fragmented and confusing” system.
Geographically, the highest default rates are concentrated in Southern states, with Mississippi leading at 28.3%. Other states with elevated rates include Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina, Texas, Alaska, Arizona, Ohio, Indiana, Michigan, New Mexico and Nevada. Puerto Rico reported a 30.9% default rate, the highest among U.S. jurisdictions.
Borrowers who attended for-profit colleges face greater repayment challenges; 33% of those borrowers are 90 days or more delinquent, more than double the rate for public-school alumni. Among institutions with the highest nonpayment rates, 76% are for-profit schools.
Advocacy groups note that many defaulting borrowers are working-class individuals struggling with rising living costs. Aissa Canchola Bañez, policy director for Protect Borrowers, said, "Folks are struggling to make ends meet and cover all the rising costs of everything else. The growing student loan bills are making things worse and folks are falling behind."
Industry representatives also acknowledge the issue. Jason Altmire, head of the Career Education Colleges and Universities association, said, "We take it seriously. It's a real problem."