Student loan defaults climb as borrowers face post-pause bills
An AP analysis found defaults rose by more than 4.2 million in a year, leaving borrowers facing damaged credit, collections and confusion over repayment plans.
By Daniel Okafor · Business Editor
4 min read
Student loan defaults have surged since pandemic protections ended, putting millions of borrowers at risk of collections, damaged credit and possible benefit or wage seizures. An Associated Press analysis found the number of borrowers with defaulted student loans rose by more than 4.2 million from April 2025 to March 2026.
The increase includes borrowers who fell behind after federal student loan bills resumed following the pandemic-era payment pause. The AP reported that about 9.5 million borrowers, more than one in five, are now in default, topping the previous record of 8 million in December 2019.
Ashley Dreahn, 40, of Texas, is among those caught in the system. She filed for bankruptcy in 2022 believing it would clear her debts, but learned this spring through a credit-monitoring service that her student loans had grown to $94,298 with interest and were in default.
Dreahn first enrolled at Texas Woman’s University in 2004 and was the first in her family to attend college, according to the AP. She worked several jobs while studying but still borrowed heavily, later earning a history degree with an education and social studies emphasis.
She started as a teacher, then borrowed more to earn two associate degrees from a Texas public community college in hopes of moving into chemical processing. Dreahn told the AP that a refinery job offer was withdrawn because she exceeded the weight limit for the company’s safety equipment.
Her finances worsened after Hurricane Harvey, a job loss and a car breakdown. After filing for bankruptcy, she saw online credit-report messages indicating her loans had been paid off, the AP reported. Such notices can appear when loans are consolidated or transferred, even if the debt remains.
Student loans are rarely wiped out in bankruptcy. Borrowers generally must show “undue hardship,” a process advocates described to the AP as difficult and available to few people.
Defaults follow the end of relief measures
The federal government paused student loan payments during the pandemic until 2023. President Joe Biden’s administration then gave borrowers a one-year grace period, which ended in fall 2024, allowing loans to default after nine months without payment.
Federal data cited by the AP show another 870,000 borrowers are 181 to 270 days late, close to default. The AP also reported that 33% of borrowers from for-profit schools were at least 90 days behind, more than twice the rate for borrowers from public schools.
Career Education Colleges and Universities, an association of private trade schools, has formed a task force to contact students about loan repayment, its president and CEO Jason Altmire told the AP. “We take it seriously,” Altmire said.
Borrowers in default can face severe consequences. The federal government can garnish wages and Social Security payments, though the Trump administration in January backed away from plans to begin collections, according to the AP. Moody’s Analytics said this spring that garnishments are likely within the next year and warned they could add pressure to a fragile economy.
Repayment changes add confusion
The AP reported that millions of borrowers face higher bills as the government dismantles the SAVE income-driven repayment plan. The Education Department has said changes are meant to simplify a fragmented system.
Barbara Howaniec, a 63-year-old psychiatric nurse practitioner in Auburn, Maine, told the AP she borrowed about $62,000 for a master’s degree from New York University and still owes about $67,000 after two decades of payments. She said she stopped paying after being told she owed 355 more payments under a changed schedule.
Shannon Khan, a 46-year-old mental health worker in Webster, Texas, told the AP she had no payment under SAVE but was later moved to another plan requiring $847 a month. She said she recently learned the payment would rise to $1,683 for nearly a decade.
Dreahn now works as a supervisor at a prison in Huntsville, Texas, and hopes she may eventually qualify for Public Service Loan Forgiveness, which requires 10 years of payments while working for a government or nonprofit employer. She told the AP she is weighing how to cover groceries, bills and student loan payments after the debt she thought was gone returned.
This story draws on original reporting from Fortune.