Student-loan borrowers are falling behind on payments at record levels.
A new report by left-leaning groups, the Century Foundation and Protect Borrowers, found that nearly 9 million student-loan borrowers — or one out of every five — are in default, which typically occurs after a federal borrower hasn’t made a payment for more than 270 days.
Additionally, the report said that one in four borrowers with a payment due is in delinquency, meaning they’re behind on payments, and those borrowers have seen their credit scores decrease by 57 points on average over the first three quarters of 2025. A drop in credit can cause borrowers to lose access to various forms of credit or loans, making it difficult to afford basic necessities, the report said.
This data follows President Donald Trump’s restart of collections for defaulted borrowers in May 2025 after a five-year pause. While the Department of Education announced in January that it was pausing wage garnishments and tax refund seizures for defaulted borrowers, it’s unclear when the pause will lift, and more borrowers could be at risk of facing those consequences.
The report said that the pause is “welcome” but “puts a band-aid on a serious wound.”
“Considering the nation’s worsening affordability crisis and unprecedented number of borrowers entering default, resuming garnishments would be cruel and economically reckless,” the report said.
Ellen Keast, the Department of Education’s press secretary for higher education, attributed the rise in delinquency and defaults to various relief measures that the Biden administration put in place, including the “on-ramp” to repayment, during which the department did not report any missed payments to credit agencies.
“The idea of a sudden increase in delinquencies in student loans is a misnomer — the Trump Administration is once again reporting full and accurate data on student loan repayment instead of extending so-called flexibilities related to a pandemic that ended five years ago,” Keast said. She added that the department “will continue to support regular, on-time repayment.”
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Options for defaulted student-loan borrowers
The Department of Education released guidance on February 18, urging institutions to reduce student default rates. The guidance included updated nonpayment rates, which are the percentage of borrowers who entered repayment between January 2020 and May 2024 with federal student loans more than 90 days delinquent. Over 1800 institutions have nonpayment rates at or above 25%, the guidance said.
“Student borrowers have an obligation to repay their loans, but institutions also share a responsibility to ensure their students are prepared to enter repayment and understand the consequences of nonpayment,” Undersecretary of Education Nicholas Kent said in a statement. “Institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant share of their students are not well-prepared to repay their loans.”
The department’s looming repayment changes could make things more difficult for some borrowers. Trump’s “big beautiful” spending legislation eliminated existing income-driven repayment plans and replaced them with less generous options, meaning borrowers will face longer timelines to loan forgiveness and likely higher monthly payments.
The department also announced a settlement to eliminate Biden’s SAVE plan, which would have allowed for cheaper monthly payments and a shorter timeline to relief. The report said that SAVE borrowers are “more financially fragile than the average borrower,” citing data from the Biden administration showing that more than half of them qualified for $0 monthly payments, putting them at greater risk of delinquency and default.
Student loan borrowers have a few options to get out of default. One option is loan rehabilitation, in which a borrower must contact their servicer and enter an agreement to make nine payments over 10 consecutive months. While wage and benefits garnishment will continue during this time, the default status will be removed from the borrower’s credit report once rehabilitation is complete.
Another option is loan consolidation, in which a borrower can apply to consolidate a defaulted student loan into a federal consolidation loan. After consolidation, the borrower would become eligible for federal benefits, but the default status would remain on the borrower’s credit history.
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