The US is facing a record-breaking student loan debt crisis. Around 9.5 million people are now in default, meaning they have not made a required student loan payment for more than nine months. About one in every five federal student loan borrowers is now in default.
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The number of borrowers in default has increased sharply. It jumped from 5.3 million in June last year to about 9.5 million now, according to the Office of Federal Student Aid. The amount of defaulted student loan debt has also grown. About $233 billion worth of federal student loans are now in default, out of the government’s $1.7 trillion student loan portfolio, according to the Office of Federal Student Aid, cited by CBS News.
The problem grew after pandemic protections ended. During the COVID-19 pandemic, the US government allowed borrowers to pause their student loan payments. Student loan payments officially restarted in 2023, but borrowers were given a one-year buffer period, so missing payments would not immediately push them into default.
That safety period ended in fall 2024, and borrowers could start entering default again after being behind for nine months. From June 2025, borrowers started falling into default again for the first time since the pandemic, according to the Office of Federal Student Aid, cited by CBS News. Many borrowers simply ran out of time once the payment clock started again. Default can badly damage a borrower’s credit score, making it harder to borrow money in the future.
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Borrowers in default can also lose access to new federal student financial aid. The government can also take money directly from wages or Social Security payments to recover unpaid student loans. The Trump administration has temporarily paused these forced collections. However, borrowers could still face another wave of defaults in the coming months. Nearly one million borrowers are already six to nine months behind on payments, putting them very close to default, according to NewsNation. Student loans are very difficult to erase through bankruptcy.
Borrower advocates say many Americans cannot keep up with rising costs. “People are struggling to make ends meet, and student loan bills are making things worse,” said Aissa Canchola Bañez, Policy Director at Protect Borrowers, according to CBS News. She said many people falling behind are working-class Americans who cannot afford student loan payments along with other daily expenses, according to CBS News.
The Trump administration has ended the SAVE repayment program, one of the most generous income-driven repayment plans, as part of changes to the federal student loan system. Millions of borrowers who were enrolled in SAVE may now have to pay higher monthly loan bills. New borrowers now have fewer repayment choices. They can choose between one standard repayment plan and one income-driven repayment plan.
The Education Department says the new system is meant to simplify a repayment process that had become confusing. An Associated Press analysis found that many states with the highest default rates are in the Southern US. Mississippi has the highest student loan default rate in the country at 28.3%. Other states with high default rates include Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina and Texas.
The list also includes Alaska, Arizona, Ohio, Indiana, Michigan, New Mexico and Nevada, according to an AP analysis. Among those states, New Mexico was the only state that President Donald Trump did not win in the 2024 election. Puerto Rico has an even higher default rate than any US state at 30.9%. Borrowers who attended for-profit colleges are struggling more than others to repay their loans, according to the Office of Federal Student Aid.
About 33% of borrowers from for-profit colleges were at least 90 days behind on their student loan payments, according to the Office of Federal Student Aid. That late-payment rate is more than twice as high as the rate for borrowers who attended public colleges, according to the Office of Federal Student Aid. Among schools with the highest non-payment rates, 76% were for-profit colleges, according to the Office of Federal Student Aid.
The Office of Federal Student Aid says schools with high non-payment rates face a serious risk of seeing more borrowers fall into default. Career Education Colleges and Universities, a group representing private career schools, has created a task force to encourage students to repay their loans.
Jason Altmire, president of Career Education Colleges and Universities, said the group is taking the issue seriously, according to CBS News. Altmire said the rise in defaults is linked to the pandemic and confusion over the Biden administration’s unsuccessful student loan forgiveness efforts. He said student loan defaults are “a real problem” and the issue will be discussed at the association’s summer convention. Separately, many Americans are also struggling to pay for everyday needs like groceries.
