Student Loan Delinquency and Default Rates Reach Record Highs

Millions of borrowers are struggling to make payments as pandemic-era relief ends

Mar. 20, 2026 at 9:03am

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A record 7.7 million federal student loan borrowers have defaulted on $181 billion in loans, with an additional 3 million at least three months behind on payments. The high delinquency and default rates come as pandemic-era relief measures end, forcing millions to resume payments on loans that have accrued interest for months. Experts warn the situation is likely to worsen as the economy struggles and borrowers face difficult choices about managing their finances.

Why it matters

The surge in delinquencies and defaults reflects the financial strain on lower-income households as the 'K-shaped' economic recovery leaves many behind. Missed student loan payments can severely damage credit scores, making it harder for borrowers to rent homes, obtain loans, and build wealth. The situation raises concerns about the government's ability to effectively manage the $1.7 trillion federal student loan portfolio.

The details

The Education Department data shows the highest combined rate of serious delinquency and default since the government began reporting this data nearly a decade ago. Of the nearly 43 million federal student loan recipients, roughly a quarter are significantly behind on payments. The problem is expected to grow as a court ruling ends the Biden administration's SAVE repayment plan, forcing millions to resume paying loans that had been paused.

  • By the end of 2025, 7.7 million borrowers had defaulted on $181 billion in federal student loans.
  • As of the end of 2025, 3 million other loan recipients were at least three months late on their payments.
  • In January 2026, the Education Department reversed its plan to send out garnishment notices to collect on defaulted loans.
  • In late 2019, just over 6 million borrowers had loans in deferment or forbearance, compared to 12 million at the end of 2025.

The players

Education Department

The federal agency responsible for managing the $1.7 trillion federal student loan portfolio.

Joseph R. Biden Jr.

The former president who introduced the SAVE repayment plan, which was later struck down by the courts.

Elizabeth Robeson

A borrower who sued the Education Department in a last-ditch effort to preserve the SAVE repayment plan, which had allowed her to make more than 325 payments on her $90,000 loan balance.

Nicholas Kent

The Education Department's under secretary, who said the agency would provide guidance for borrowers transitioning from the SAVE plan to other options.

Scott Buchanan

The executive director of the Student Loan Servicing Alliance, an industry trade group, who warned the resumption of payments after the pandemic would be a 'very, very bumpy ride.'

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What they’re saying

“The last thing student loan borrowers need is more chaos from the federal government.”

— Kyra Taylor, Staff attorney at the National Consumer Law Center

“The government's ever-shifting repayment rules 'forced millions of working Americans like me to live in a labyrinth with no clear exit.'”

— Elizabeth Robeson

“The resumption of payments after five years was always going to be a very, very bumpy ride. And it has been.”

— Scott Buchanan, Executive director of the Student Loan Servicing Alliance

What’s next

The Education Department plans to provide guidance in the coming weeks for borrowers transitioning from the SAVE repayment plan to other options. Starting in July, new borrowers will have only two choices: fully repaying their loans on a fixed term of up to 25 years, or using a new income-linked plan called RAP that can stretch up to 30 years.

The takeaway

The surge in student loan delinquencies and defaults highlights the financial strain on lower-income households and the challenges the government faces in effectively managing the $1.7 trillion federal student loan portfolio. The situation raises concerns about the long-term impact on borrowers' credit and ability to build wealth, as well as the government's capacity to support struggling borrowers.