U.S. student loan defaults jump by more than 4.2 million in a year

Defaulted U.S. student loans surged by more than 4.2 million borrowers from April 2025 to March 2026, lifting the total to around 9.5 million, or more than 1 in 5 borrowers, according to an Associated Press analysis. The increase followed the end of pandemic-era payment pauses and a one-year grace period from President Joe Biden’s administration, which let missed payments begin counting toward default again in fall 2024. Borrowers enter default after nine months without payment, exposing them to damaged credit, collections and potentially wage or Social Security garnishment. The pressure may not be over. Federal data show 870,000 borrowers are between 181 and 270 days delinquent, close to default, while millions also face higher monthly bills as the Education Department dismantles the SAVE plan, an income-driven repayment plan (payments tied to income) the department says it is replacing to simplify a fragmented system. A Moody’s Analytics report this spring said garnishments are likely to begin within the next year, calling that “an additional headwind in an increasingly fragile economy.” The story traces the burden through borrowers including Ashley Dreahn, a 40-year-old Texas prison supervisor who said loans she believed had been discharged in bankruptcy had grown to $94,298 with interest and entered default. It also highlights Barbara Howaniec, a 63-year-old psychiatric nurse practitioner from Auburn, Maine, who said about $62,000 borrowed for a New York University master’s degree in 2001 had become around $67,000 after years of payments and deferments, and Shannon Khan, a 46-year-old mental health worker from Webster, Texas, whose required payment rose from zero under SAVE to $847 and then to $1,683 a month for nearly a decade. Advocates say confusion over servicer transfers, repayment-plan changes and the difficulty of discharging student debt in bankruptcy is leaving many borrowers overwhelmed.