3.6 Million Federal Student Loan Borrowers Default in Six Months

Millions of student loan borrowers are defaulting on their federal student loans. It is estimated that 2.6 million federal student loan borrowers defaulted on their student loans in the first quarter of 2026.

And about 1 million borrowers defaulted on their federal student loans in the fourth quarter of 2025, according to the Federal Reserve Bank of New York.

It takes 270 days of missed payments to enter into default on federal student loans and defaulted student loan borrowers are more likely to be overdue on other types of debt — so defaulted student loans can lead to even more financial woes for borrowers.

Here is a closer look at the student loan borrowers who entered into default on their student loans in the past two quarters. The average borrower entering default on a federal student loan is almost 40 years old, was not past due on their student loans prior to the pandemic, and is more likely to live in the South.

Some in Default Have Been Struggling for Years

About 1 in 4 borrowers in default were already behind on their payments prior to the pandemic. They were given a break when student loan payments were paused and then fell behind on their payments and into default when student loan payments started back up again.

Southern states have the largest share of defaulted student loan borrowers. Louisiana, Mississippi, Alabama, Georgia, and South Carolina each have at least 10% of borrowers who are defaulting on their student loans 

What Are the Consequences for Defaulted Borrowers?

What happens to the 3.6 million borrowers who have entered default over the past two quarters? Default can expose borrowers to collection actions, including wage garnishment, tax refund offsets, and federal benefit offsets, though some actions like wage garnishment are currently paused or delayed.

But borrowers won’t be able to avoid the credit consequences of a defaulted student loan. The New York Fed found many newly delinquent borrowers saw steep credit score declines, including more than 2.2 million borrowers whose scores fell by more than 100 points.

Many borrowers may find it harder or more expensive to qualify for traditional credit while the default remains on their credit report.

Struggles With Other Types of Debt

Student loan borrowers with defaulted student loans also had payment troubles on other credit products, including auto loans, credit cards, and mortgages. What kind of trouble were they in? Some borrowers were delinquent on these other credit products while falling into default on their student loans.

Almost 40% of student loan borrowers with auto loans are past due on their loan payments. Fifty-six percent of student loan borrowers with at least one credit card are past due on their credit card bills. And 20% of student loan borrowers with a mortgage are past due on their home loans.

Another Possible Wave of Defaults

Another wave of defaults may be on its way as borrowers in the SAVE repayment plan move to new plans.

The more than 7 million borrowers will need to choose a new payment plan or be automatically enrolled in the current standard repayment plan or the new tiered standard plan. Their loan servicers will reach out on July 1 alerting borrowers they have 90 days to choose a new payment plan.

At present, SAVE borrowers are not making student loan payments. The plans are in forbearance and payments are paused and borrowers are not being billed. 

The Bottom Line

Federal student loan defaults are affecting millions of borrowers. One million borrowers defaulted on their loans in the fourth quarter of 2025, and an additional 2.6 million borrowers defaulted on their loans in the first quarter of 2026.

What kinds of borrowers are defaulting on federal student loans? The average borrower entering default on a student loan is almost 40, was not past due on their student loans prior to the pandemic, and is more likely to live in the South.