10 Million Federal Student Loan Borrowers Fall Behind on Payments

More than 10 million federal student-loan borrowers are currently behind on their payments, with 9.3 million in default and 1.5 million in late-stage delinquency. Total defaulted debt has reached $234 billion, accounting for roughly 14% of the overall portfolio.

This surge follows the July 1 implementation of repayment changes under Donald Trump, which eliminated the Biden-era SAVE plan. Borrowers report that the new repayment structures have significantly increased their monthly costs. In response to the crisis, the Department of Education has temporarily paused the seizure of federal benefits and wage garnishment while transferring the management of defaulted loans to the Treasury Department.

Democratic senators, including Bernie Sanders, Elizabeth Warren, and Ed Markey, introduced legislation in August to protect borrowers with disabilities and older borrowers from Social Security garnishment. Senator Sanders argued that in the richest country in the history of the world, no senior should have their Social Security payments taken away from them to pay back student debt.