Millions of student loan borrowers may be headed for default: Here's who's most at risk—and how to avoid it

Student loan payments can cost borrowers hundreds of dollars each month. But falling behind on those payments may wind up being even costlier.

Advocacy organizations and student loan experts have warned of a coming "default cliff" for millions of borrowers who are already behind on payments. The last of the pandemic-era safeguards expired earlier this year, and President Donald Trump's administration has made it clear it is intent on collecting outstanding loans.

"We are committed to ensuring that borrowers are paying back their loans, that they are fully supported in doing so," Education Secretary Linda McMahon wrote in The Wall Street Journal in April.

Federal student loans typically enter default when a borrower goes 270 days without payment. The potential wave of defaults is the culmination of a number of circumstances.

Borrowers weren't required to make payments from March 2020 until September 2023, but loan servicers were instructed not to report delinquency — missed payments — to credit bureaus until September 2024. That delinquency reporting resumed at the beginning of 2025.

Now, borrowers who continue to miss payments risk having their tax refunds withheld and wages garnished.

Around 8 million borrowers had loans in default in March 2020, according to Federal Student Aid data. That figure dropped to 5.3 million by March 2025, largely due to Fresh Start, a Biden-era program that allowed defaulted borrowers to have their loans brought back into good standing between April 2022 and October 2024. 

As of the second quarter of 2025, roughly 10% of student debt was at least 90 days past due, according to Federal Reserve data. Around 13% of loans entered "serious delinquency," or exceeded 90 days past due, in the second quarter.

Black and other minority borrowers, those who did not complete a degree or credential, older borrowers, low-income borrowers and other groups are among those most likely to default.

Here is the share of borrowers at least 90 days past due on their loans in each state, as of the first quarter of 2025, according to the most recent Federal Reserve data:

If you're unsure about the status of your loans, log into your StudentAid.gov account to see if they're headed toward default or already there.

When you default on your student loans, the entire balance comes due immediately, a process known as acceleration. You can get out of default by paying off that balance, but that is not likely a viable option for most borrowers.

If you take no action once your loans are in default, you risk having your Social Security payments and tax refunds withheld or your wages garnished. 

"This can importantly include refundable tax credits, including those that are meant to protect against child poverty, such as the child tax credit and the earned income tax credit," Abby Shafroth, managing director of advocacy at the National Consumer Law Center said in a recent media briefing.

You will be barred from accessing any additional federal student aid and your credit score — which would likely already be damaged from the missed payments — can take another hit. 

"Borrowers who struggle to afford their payments [who wind up] in default can then sort of paradoxically be compelled to repay more each year, and more in total over the life of the loan, than if they'd not fallen into default," Shafroth says.

The combination of acceleration, wage garnishment and Treasury offset could have a borrower paying more in the short-term and in total than they would have on an income-driven repayment plan, Shafroth says. Borrowers may also face collection fees and interest capitalization which is when the interest owed gets added to the principal balance. They also lose access to income-driven repayment plans and any loan forgiveness they may have otherwise qualified for.

To get out of default, you'll need to either pay off the balance or enter loan rehabilitation.

In loan rehabilitation, you'll negotiate a payment plan with your servicer and be required to make nine consecutive, on-time payments. Your monthly payment can be as low as $5 during this period, depending on your income, according to Federal Student Aid. However, your wages may still be garnished and won't count toward your payment progress during rehabilitation.

Once your loans are rehabilitated, they are considered in good standing and you may once again apply for income-driven repayment plans.

If you're struggling to make your student loan payment, try to contact your loan servicer as soon as possible to see what your options are. The first line of defense for many borrowers is enrolling in an income-driven repayment plan. Your payment can be as low as $0 a month depending on your income when you enroll.

However, if you have explored those options, you should consider applying for a deferment or forbearance, Shafroth says.

Deferment and forbearance both pause mandatory payments for borrowers in certain financial situations like unemployment or major medical treatments. Borrowers need to apply through their loan servicer and demonstrate their financial need in order to be granted either option and interest may continue accruing if your request is approved.

"Those temporarily pause payments, they're not a long-term solution, but they're a good temporary solution," she says.

Correction: This story has been updated to clarify that federal student loans typically enter default when a borrower goes 270 days without payment.

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