{"id":3807,"date":"2026-07-20T14:09:39","date_gmt":"2026-07-20T14:09:39","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=3807"},"modified":"2026-07-20T14:09:39","modified_gmt":"2026-07-20T14:09:39","slug":"student-loan-defaults-hit-record-233-billion-with-1-in-5-borrowers-over-9-months-behind","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=3807","title":{"rendered":"Student loan defaults hit record $233 billion with 1 in 5 borrowers over 9 months behind"},"content":{"rendered":"
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The numbers have spiked since payments came due again following a lengthy pause intended to provide relief during the COVID-19 pandemic. Today, around 9.5 million people \u2014 1 in 5 federal student loan borrowers \u2014 are in default, meaning they are more than nine months behind on their payments.<\/p>\n

Read more The FDA\u2019s peptide vote could create telehealth\u2019s next multibillion-dollar market<\/a><\/p>\n

While credit scores can suffer when borrowers are just a few months behind, entering default brings the possibility of more serious consequences, including garnished wages or Social Security payments. For now, the Trump administration has\u00a0held off\u00a0on such involuntary collections.<\/p>\n

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Despair is on the rise, advocates say.<\/p>\n

\u201cFolks 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,\u201d said Aissa Canchola Ba\u00f1ez, policy director for the advocacy group Protect Borrowers.<\/p>\n

Here are some takeaways from an Associated Press analysis of student loan defaults.<\/p>\n

Why a record number of people are in default now<\/h4>\n

The\u00a0U.S. Education Department\u00a0allowed borrowers to suspend federal student loan payments during the economic tumult of the pandemic. Though payments technically started coming due again in 2023, the Biden administration provided a one-year buffer period that ended in the fall of 2024.<\/p>\n

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Loans couldn\u2019t enter default during this time, and federal programs designed to help delinquent borrowers and debt forgiveness initiatives brought millions out of default.<\/p>\n

Starting in June 2025, with the pause having ended nine months prior, borrowers began defaulting again for the first time since the pandemic.<\/p>\n

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Since then, the number of defaulted borrowers has exploded from 5.3 million to around 9.5 million, according to data from the Office of Federal Student Aid. Out of $1.7 trillion in federally backed student loans nationwide, $233.3 billion is in default.<\/p>\n

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Another wave of defaults could be on the way. The Trump administration has eliminated the most generous income-driven repayment plan,\u00a0Saving on a Valuable Education, or SAVE, as part of its overhaul of the federal student loan system. The millions of borrowers who had been enrolled in SAVE now will face the strain of paying more each month.<\/p>\n

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Starting this month, new borrowers pick between one standard repayment plan and one income-driven option, as opposed to having several options. The Education Department has described the changes as a simplification of a \u201cfragmented and confusing\u201d system.<\/p>\n

Many of the states with the most defaults are in the South<\/h4>\n

Many of the states with the highest concentrations of defaulted borrowers are in the South, an AP analysis found.<\/p>\n

Mississippi has the nation\u2019s highest default rate at 28.3%, and others near the top include Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina and Texas. Rounding out the 15 states with the highest default rates are Alaska, Arizona, Ohio, Indiana, Michigan, New Mexico and Nevada.<\/p>\n

Read more Meet a 40-year-old who filed for bankruptcy in 2022 but still can\u2019t erase $94,000 in student-loan debt: \u2018you\u2019re just lost in the system somewhere\u2019<\/a><\/p>\n

Of those states, New Mexico was the only one Republican President Donald Trump didn\u2019t win in 2024.<\/p>\n

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\u201cThese are folks who live in states that President Trump won in the previous election,\u201d Ba\u00f1ez said. \u201cAnd why I bring that up is, you know, there\u2019s a lot of misconceptions and tropes about who student loan borrowers are, and who are the ones who are falling behind.\u201d<\/p>\n

She said many are \u201cworking-class folks who just cannot keep up with these bills on top of everything else.\u201d<\/p>\n

Meanwhile, the territory of Puerto Rico had a 30.9% default rate, higher than any of the states.<\/p>\n

Borrowers who attended for-profit schools struggle more to repay loans<\/h4>\n

Students who attended for-profit colleges struggle more than others to pay back their loans. Thirty-three percent of those borrowers were 90 days or more behind on their student loan payments, a rate more than double that of borrowers who attended public schools, according to data by the Office of Federal Student Aid released this year to help schools understand and identify default risks.<\/p>\n

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Out of the schools in the top quarter for nonpayment rates, 76% were for-profit schools.<\/p>\n

The FSA argues that a high nonpayment rate represents a \u201cserious risk\u201d of developing a high default rate.<\/p>\n

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An association for private trade schools and career colleges is so concerned it has created a task force to reach out to students about the importance of loan repayment.<\/p>\n

Jason Altmire, the head of the group, Career Education Colleges and Universities, said some of it can be chalked up to the pandemic. Other borrowers are confused over the Biden administration\u2019s failed loan forgiveness effort. Still, he said the issue will be discussed at the association\u2019s summer convention.<\/p>\n

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\u201cWe take it seriously,\u201d he said. \u201cIt\u2019s a real problem.\u201d<\/p>\n

___<\/p>\n

The Associated Press\u2019 education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP\u2019s\u00a0standards\u00a0for working with philanthropies, a\u00a0list\u00a0of supporters and funded coverage areas at AP.org.<\/p>\n

Read more Japan\u2019s monetary conundrum \u2014\u00a0why the yen hit a 40-year low as interest rates hit a 31-year high<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Many of the states with the highest concentrations of defaulted borrowers are in the South, an AP analysis found. 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