Student loan defaults jump as pandemic-era payment break fades

About 9.5 million people with federal student loans are now in default, a sharp rise after the pandemic-era payment freeze and a later grace period came to an end, according to Office of Federal Student Aid data.

That amounts to roughly 1 in 5 federal student loan borrowers. Default means a borrower is more than nine months behind on payments. The total has climbed from 5.3 million since borrowers began entering default again in June 2025, the data show.

The dollar figure is just as stark: $233.3 billion of the nation’s $1.7 trillion in federally backed student debt is now in default, according to the federal data.

Borrowers can take credit-score damage before they hit default. Once they do default, they can face tougher consequences, including wage garnishment or deductions from Social Security payments. CBS News reported that the Trump administration has held off on those involuntary collections for now.

Aissa Canchola Bañez, policy director at the advocacy group Protect Borrowers, said rising household costs are colliding with student loan bills.

“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,” Bañez said.

How defaults started rising again

The Education Department let federal borrowers stop making payments during the economic disruption tied to COVID-19. Payments officially resumed in 2023, but the Biden administration added a one-year on-ramp that prevented loans from entering default. That protection ended in fall 2024.

During the pause and buffer period, federal programs aimed at delinquent borrowers and debt forgiveness efforts moved millions of people out of default. Once the protections had been gone for nine months, defaults started again.

Another wave may be coming. The Trump administration has ended the Saving on a Valuable Education plan, known as SAVE, as part of changes to the federal student loan system. Millions who had been enrolled in that income-driven repayment plan now face higher monthly bills, according to the report.

Beginning this month, new borrowers have one standard repayment plan and one income-driven option to choose from, rather than several. The Education Department has described the overhaul as a way to simplify what it called a “fragmented and confusing” system.

South sees many of the highest default rates

An Associated Press analysis found that many states with the highest concentrations of defaulted borrowers are in the South. Mississippi has the highest state default rate at 28.3%.

Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina and Texas are also near the top. The 15 highest-rate states also include Alaska, Arizona, Ohio, Indiana, Michigan, New Mexico and Nevada, according to the AP analysis.

Of those states, New Mexico was the only one President Trump did not win in 2024. Bañez said that detail challenges assumptions about who is struggling with student loans, describing many affected borrowers as “working-class folks who just cannot keep up with these bills on top of everything else.”

Puerto Rico’s default rate was even higher than any state, at 30.9%.

For-profit college borrowers are falling behind faster

Borrowers who attended for-profit colleges are having a harder time repaying than others, according to Office of Federal Student Aid data released this year to help schools spot default risks.

Thirty-three percent of those borrowers were at least 90 days late on payments, more than twice the rate for borrowers who attended public schools. Among schools in the top quarter for nonpayment rates, 76% were for-profit institutions.

The Federal Student Aid office said a high nonpayment rate is a “serious risk” for a high default rate.

Career Education Colleges and Universities, an association for private trade schools and career colleges, has created a task force to contact students about repayment. Jason Altmire, the group’s president, said pandemic disruption and confusion over the Biden administration’s failed loan forgiveness effort are part of the problem.

“We take it seriously,” Altmire said. “It’s a real problem.”

This story draws on original reporting from CBS News.