Student loan defaults in the United States have surged to a record high, with 9.5 million borrowers now in default, defined as being more than 270 days behind on loan payments, according to data from the Office of Federal Student Aid [1]. This figure represents more than 20% of all federal student loan borrowers and is nearly double the 5.3 million borrowers in default as of March 2025, which was shortly after the end of the pandemic-era payment pause [1]. The moratorium on student loan payments, initially enacted by former President Joe Biden at the onset of the COVID-19 pandemic, officially ended in January 2024, but a nine-month extension pushed the effective end to September 2024 [1]. As borrowers had 270 days before entering default, defaults began to rise sharply in June 2025, adding over 4 million new defaulted borrowers [1].
Of the $1.7 trillion in federally-backed student loans, $233.3 billion is now in default [1]. Borrowers in default face potential collection actions, including wage garnishment and referral to collections agencies [1]. However, the Trump administration's Department of Education has delayed resuming wage garnishment, which was initially planned for January [1].
A significant policy development occurred when a federal appeals court, following a challenge led by Republican attorneys general and supported by the Trump Department of Justice, terminated the SAVE Plan—a Biden administration program that had lowered repayment rates and enrolled 7.5 million Americans [1]. The Department of Justice encouraged courts to vacate the plan and reached settlements with states such as Missouri that were suing over the program [1].
Geographically, southern states have the highest concentrations of borrowers in default, with Mississippi leading at over 28%, and Puerto Rico, a U.S. territory, exceeding 30% [1].
CONCLUSION
The end of the student loan payment moratorium and the termination of the SAVE Plan have contributed to a record surge in student loan defaults, now affecting over 9.5 million borrowers. With more than $233 billion in default and significant regional disparities, the situation poses substantial risks for borrowers and potential economic ripple effects.