U.S. student loan defaults surge to record levels after pandemic pause ends

Around 9.5 million federal student‑loan borrowers – roughly one in five – are now in default, the highest level on record. The surge follows the end of pandemic‑era payment protections and a one‑year grace period that prevented loans from entering default until fall 2024.

Out of $1.7 trillion in federally backed loans, about $233 billion is in default. The Trump administration has eliminated the SAVE income‑driven repayment plan and signaled a willingness to garnish wages or Social Security payments, raising concerns among borrowers and advocates.

The rise affects borrowers across many states, with Mississippi showing the highest default rate at 28.3 %. Advocates warn that additional defaults could follow as borrowers face higher monthly payments without the previous safeguards.