Defaults on student loans in the United States have increased significantly, with approximately 9.5 million borrowers—about 20% of federal student loan borrowers—now in default, meaning they are over nine months behind on payments. This rise in defaults follows the resumption of payments after a pause during the COVID-19 pandemic. The U.S. Department of Education had previously allowed borrowers to suspend payments, and while payments resumed in 2023, a one-year buffer period was provided by the Biden administration, which ended in fall 2024.
Data from the Office of Federal Student Aid indicates that the number of defaulted borrowers has surged from 5.3 million to around 9.5 million since the end of the payment pause. Currently, $233.3 billion of the $1.7 trillion in federally-backed student loans are in default. The Trump administration's recent changes to income-driven repayment plans may further exacerbate the situation, as many borrowers will face higher monthly payments.
An analysis revealed that states in the South have the highest default rates, with Mississippi leading at 28.3%. Other states with high default rates include Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina, and Texas. Puerto Rico has a default rate of 30.9%, the highest among all regions. Additionally, borrowers from for-profit colleges are experiencing higher rates of default, with 33% of these borrowers being 90 days or more behind on payments, compared to public school borrowers. The Career Education Colleges and Universities association is addressing the issue, emphasizing the importance of loan repayment among students.