Defaulted Federal Student Loans Rise by 4.2 Million After Payment Freeze Ends

The number of borrowers with defaulted federal student loans increased by more than 4.2 million from April 2025 to March 2026, nypost.com reported. As of March 2026, approximately 9.5 million borrowers, more than one in five, were in default. This total exceeds the previous record of 8 million set in December 2019.

Another 870,000 borrowers held loans between 181 and 270 days past due, placing them on the verge of default according to federal data. Borrowers enter default after missing payments for nine months. The federal government can then garnish wages and Social Security payments.

The Trump administration walked back plans to begin collections on defaulted loans in January 2025. A Moody’s Analytics report released in spring 2026 said garnishments are likely to begin within the next year. The U.S.

Department of Education is also dismantling the SAVE income-driven repayment plan. Ashley Dreahn, 40, filed for bankruptcy in 2022 after her loans went unpaid. She later learned the balance had grown to $94,298 with interest.

Dreahn now works as a supervisor at a prison in Huntsville, Texas. Barbara Howaniec, 63, borrowed about $62,000 for a master’s degree from New York University and graduated in 2001. She still owes around $67,000 with interest and has defaulted.

Shannon Khan, 46, saw her required monthly payment rise from $847 to $1,683 after moving off the SAVE plan. The pandemic-era payment freeze ended in fall 2024 following a one-year grace period provided by the Biden administration. Thirty-three percent of borrowers at for-profit schools were at least 90 days late on payments, more than twice the rate at public schools, federal data showed.