Federal Student Loan Defaults Reach 3.6 Million After Payment Pause Ends

The Federal Reserve Bank of New York reported that 3.6 million federal student loan borrowers are currently in default. The average age of these borrowers is nearing 40, up 2.5 years from pre-pandemic levels. Borrowers aged 50 and older now face a higher risk of default than younger groups. More than 10 percent of all borrowers are behind on payments, returning to rates seen before the pandemic.

Federal student loan payments were paused at the start of the COVID-19 pandemic with interest rates set to zero. Borrowers resumed required payments in September 2023 after multiple extensions, followed by a 12-month grace period before missed payments appeared on credit reports.

Defaults require 270 days of missed payments. The first defaults from the post-pause period appeared in Q4 2025, with roughly 1 million borrowers in default that quarter and an additional 2.6 million in the first three months of 2026.

The New York Fed noted that household debt rose $18 billion to $18.8 trillion in Q1. The bank stated it is too soon to determine whether the increase signals a larger problem. "While defaulted borrowers are more likely to be past due on other forms of debt, the overall scope of student loan defaults is still relatively low, suggesting that fears of broader contagion to other credit products are premature," the New York Fed said.

The 3.6 million borrowers in default exclude those previously enrolled in the SAVE repayment plan who remain in forbearance. Very few of those borrowers have returned to repayment since missed payments began appearing on credit reports.