Millions of student loan borrowers aren't repaying their loans and defaults are up

"The stakes are high, not only for borrowers but for the broader U.S. economy. Americans in default can have up to 15% of their disposable pay garnished by the government. The government can also garnish income tax refunds and Social Security benefits. Borrowers' credit also takes a hit, making it much more difficult to buy a car or home or even rent an apartment."

"When student loan payments restarted after the COVID-19 pandemic, the government also eventually restarted the clock that ticks down on borrowers when they miss a payment. After 270 days of missed payments, a borrower is considered in default. That means no borrower could newly default on their loans until last June, at the earliest."

Federal data show roughly one million borrowers entered default on federal student loans late last year, with millions more delinquent and sliding toward default. The New York Fed's Household Debt and Credit Report through end-2025 shows nearly 10% of student loan balances are more than 90 days past due and delinquencies continue to worsen. Researchers expect defaults to keep rising after repayments and the default clock resumed following the pandemic pause. Defaults can trigger up to 15% wage garnishment, tax refund and Social Security seizures, credit harm, and negative effects on higher education, regions, and the broader economy.

Read at www.npr.org