Student loan defaults have risen dramatically in the past year as millions of borrowers fall behind on payments after pandemic protections were lifted. Another default spike could hit next summer.
More than 9 million people have student loans that have gone into default, representing about one-fifth of all borrowers. But there’s another group of borrowers that observers are worried about. Up until now, roughly 7 million people on the Saving on a Valuable Education repayment plan have been shielded by a yearslong forbearance put in place while the plan was challenged in court. Many haven’t paid any amount on their loans in years.
With , these borrowers are set to restart payments, although for what will likely be higher bills in their new plans. Federal student loans generally go into default after nine months of nonpayment, meaning the earliest people switching from SAVE could start defaulting is likely around July 2027.
“I think it’s a real risk that defaults will continue to increase,” says Robert Farrington, founder of The College Investor. “Most of the SAVE borrowers won’t officially default until next summer at the earliest, but we’ve already seen delinquencies and defaults rising from borrowers in other plans.”
After Pandemic Relief, Defaults Are on the Rise
Defaults have risen above the high set before the COVID-19 pandemic.
When federal student loan payments were paused in March 2020 to provide economic relief, about 8.6 million borrowers were in default. That number dwindled during the break. When payments restarted in 2023, the Biden administration created an “on-ramp” to help borrowers ease back in, essentially delaying defaults another year and providing other protections. That on-ramp ended in September 2024.
The extended pause meant that June 2025 was the first month that borrowers might begin defaulting again. At that time, 5.3 million borrowers were in default.
Defaults increased over the past year, and the Education Department reported that 1.3 million borrowers defaulted between January and March of 2026, the most recent data available.
But signs indicate that more are in danger of defaulting. The Trump administration says 3.5 million people have loans that are more than 30 days delinquent, and 1.4 million of those are at risk of defaulting in the next six months.
Missed payments can severely impact your finances. The government considers your loan delinquent after one missed payment, but it doesn’t notify the national credit bureaus until you’ve been delinquent for 90 days. At that point, your credit score can be damaged.
Defaults can result in even more serious consequences, with the government potentially garnishing your wages or withholding your tax refunds or Social Security benefits. The Trump administration indicated in December that it these involuntary collection methods, although it has held off for now.
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SAVE Default Wave Could Come in Summer of 2027
SAVE borrowers and start monthly payments again after a federal judge approved a settlement that effectively ended SAVE. SAVE was one of a handful of repayment plans that tie payment amounts to income, and it offered the most generous terms for most borrowers.
People on the plan began receiving notices earlier this month, informing them that they have 90 days to choose a new plan and restart payments. Many borrowers are finding that their new loan bills are likely to be considerably larger than they were on SAVE.
The pandemic pause and court-ordered SAVE forbearance combined to create a set of borrowers who haven’t paid their student loans in years or even have never made a payment. While some may struggle to afford payments, others may simply be difficult for loan servicers to reach. Experts worry that many borrowers have failed to update their addresses and may not even know which servicer they have.
Borrowers who can’t make payments when they start back up this fall would be on pace to default by midsummer of next year.
“Unfortunately, I do think that defaults on federal student loans are likely to rise over the next year or two,” says Glenn Sanger-Hodgson, a consultant at Student Loan Planner. “The truth is, for a variety of reasons, the payments that borrowers are expected to make today are often higher than the payments they were previously making prior to the SAVE forbearance.”
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What to Do If You’re Behind on Student Loan Payments
If you’ve missed student loan payments, there are options that can help you get your loans back in good standing.
Addressing Delinquency
If your loan is past due, act immediately. You are considered delinquent after one month of nonpayment, and federal loans reported 90 days past due will negatively impact your credit score.
Contact your loan servicer right away to resolve the balance or discuss options like temporary forbearance or an income-driven repayment plan. It is much easier to manage loans before they hit the 270-day threshold for default.
Managing Loan Default
If your loan enters default, you have several options.
— Pay the full balance. While not a realistic solution for most borrowers, writing a check for the full outstanding balance is the simplest way to resolve a defaulted loan.
— Rehabilitate the loan. This is a one-time opportunity where you agree to make nine on-time “reasonable” payments based on your income. Completing this program removes the default status. Beginning July 1, 2027, borrowers will have up to two opportunities to rehabilitate a defaulted loan.
— Consolidate the loan. This involves paying off your defaulted loan with a new federal consolidation loan. Note that accrued interest will be added to the new balance, which may increase your future monthly payments. Because it’s considered a new loan, you’ll only be able to choose between the Repayment Assistance Plan and tiered standard repayment plans available to new borrowers as of July 1, 2026.
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