Roughly a million borrowers defaulted on their federal student loans late last year, with millions delinquent on their payments and sliding toward the same fate. That's according to federal data and the latestHousehold Debt and Credit Reportfrom the Federal Reserve Bank of New York, which dropped on Tuesday. The report includes student loan data as of the end of 2025.
Student loan delinquencies have continued to worsen, said New York Fed researchers on a call with reporters, and they expect the number of borrowers in default to continue to grow.
The report offers further confirmation of a crisis in the U.S. student loan portfolio, in which too many borrowers are not repaying their student loans. Nearly 10% of student loan balances are more than 90 days past due, according to the report.
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.
This default wave "has very negative consequences for [borrowers]," says Jay Hurt, former chief financial officer at the Office of Federal Student Aid from 2008 to 2018. Hurt says it also "has negative consequences for institutions of higher education, and regions, and frankly has negative consequences for the economy in general."
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. Since defaults resumed, the data has shown an inexorable slide of millions of borrowers through delinquency — like a downward escalator — and ultimately into default.
Federal data, up to Sept. 30, 2025, captures every phase of this escalator.
Hurt also flags a big wild card with all this math:A whopping 9.8 million borrowers, many of them low income and at high risk of default, are in what's called forbearance, meaning their payments are paused but their loans are accruing interest. That puts these borrowers at extra risk of slipping onto that escalator through delinquency to default.
In all, Hurt says, about half of all 43 million federal student loan borrowers are "at risk."
Source: Drudge Report
