U.S. Treasury launches support center amid rising student loan defaults

The U.S. Department of the Treasury has launched the ‘Default Loans Support Center,’ an online portal designed to assist federal student loan borrowers who have fallen behind on payments. This initiative follows a decision by the administration to have the Treasury assume responsibility for collecting defaulted loans, a move that aligns with plans to restructure federal education authority.

Recent data from the Department of Education indicates a significant rise in the student loan crisis. Approximately 9.3 million federal student loan borrowers are currently in default, a 50 percent increase from 6.2 million in 2016. Factors contributing to this surge include the end of pandemic-era payment pauses, the discontinuation of the SAVE repayment plan, and rising unemployment among recent graduates.

Experts warn that the current national cohort default rate of 0.4 percent may be artificially low and should be interpreted with caution. At nearly 2,100 colleges and universities, at least 25 percent of borrowers are more than 90 days late on payments. Higher education finance experts caution that if institutions do not address these rising rates, hundreds of schools could risk losing access to federal student aid.