Student loan debt is crushing Americans — and it’s only getting worse

Millions of Americans owe more than ever

U.S. student loan debt reached a record of about $1.833 trillion by the third quarter of 2025.

Around 43 million Americans carry federal student loan debt, making it the second-largest type of consumer debt behind mortgages.

The federal government holds about 91% of that total, with private loans covering the rest. The average federal borrower owes roughly $39,500.

And the trouble isn’t just the total. A growing number of borrowers can’t keep up with payments.

Nearly 25% of borrowers miss payments

About one in four borrowers with a payment due are now behind, according to a February 2026 report by The Century Foundation, a left-leaning think tank.

That measures the share of people past due, not the share of total dollars owed.

The Federal Reserve Bank of New York uses a different measure and puts 90-plus-day delinquencies at about 10% of total balances in the third quarter of 2025. Both numbers have jumped sharply since before the pandemic.

The borrower-level rate has nearly tripled from 9.2% in 2019.

Defaults hit one every nine seconds

Protect Borrowers, a borrower advocacy group, estimates that someone defaulted on a student loan every nine seconds in 2025. That adds up to more than 3.6 million new defaults since January 2025.

Before the pandemic, the pace was about one every 26 seconds. Nearly 9 million borrowers total are now in default, the largest number on record.

About 6.3 million borrowers were still delinquent at the end of the third quarter of 2025.

A five-year pause set the stage

Federal student loan payments stopped in March 2020 at the start of the pandemic under the Trump administration, and Congress extended the pause.

The Biden administration pushed it even further and added a one-year on-ramp that shielded borrowers from penalties through September 2024.

When that protection ended, borrowers who hadn’t paid started racking up delinquencies. Many had gone more than four years without making a single student loan payment.

Wage garnishment returns for the first time since 2020

The Trump administration began garnishing wages from defaulted borrowers in January 2026, the first time since the pandemic started.

The Education Department sent initial notices to about 1,000 borrowers the week of Jan. 7, 2026, with plans to ramp up each month. Under federal law, the government can withhold up to 15% of a borrower’s after-tax pay.

It can also seize tax refunds and Social Security benefits through the Treasury Offset Program, which came back in May 2025.

The Education Department says it reports accurate data

An Education Department spokesperson told CNBC that the Biden administration had hidden delinquency rates behind relief measures.

The spokesperson said the current administration reports accurate data on repayment instead of extending pandemic-era protections.

The department has said all collection activities follow the Higher Education Act and the Debt Collection Improvement Act.

Officials have also urged colleges to reach out to former students who are behind and to strengthen their default prevention plans.

Researchers disagree on what drove the spike

The Century Foundation blames the jump largely on Trump administration policies that blocked borrowers from getting into affordable repayment plans.

The Education Department stopped processing applications for income-driven repayment plans for three months and denied 328,000 applications in August 2025.

But a JPMorgan Chase Institute report found the rise isn’t mainly about financial hardship. It pointed to confusion and borrowers who didn’t know payments had restarted.

The American Enterprise Institute noted that many newly delinquent borrowers have high credit scores and stay current on other debts.

Credit scores drop by 100 points for millions

Delinquent borrowers saw their credit scores fall by an average of 57 points over the first three quarters of 2025, according to The Century Foundation.

About 2 million borrowers who had near-prime or better credit in 2024 dropped an average of 100 points, going from 680 to 580.

A score of 580 counts as deep subprime, which makes it much harder to qualify for mortgages, car loans, and rental housing. Borrowers who fall that far could pay roughly $64,000 more over the life of a mortgage.

Southern states and Black borrowers feel it most

In Louisiana and Mississippi, nearly 40% of borrowers with payments due are behind, the highest rates in the country.

About 48% of Black student loan borrowers were past due in the third quarter of 2025, compared with roughly 20% of white borrowers and 30% of Hispanic borrowers.

Two-thirds of borrowers who defaulted during 2025 live in states that voted for Trump in the 2024 election. Borrowers aged 40 to 49 had the highest delinquency rate among age groups, at about 28%.

New law overhauls how borrowers repay

The One Big Beautiful Bill Act, signed into law on July 4, 2025, phases out several income-driven repayment plans, including SAVE, PAYE, and ICR.

Borrowers on those plans must switch to a new Repayment Assistance Plan or an updated Income-Based Repayment plan by July 1, 2028.

The law also caps graduate student borrowing and puts new limits on Parent PLUS loans starting July 1, 2026.

Consumer advocates warn that the changes could push more borrowers into default by cutting access to affordable payment options.

Borrowers still have options right now

Borrowers who aren’t sure where they stand can check at the Federal Student Aid website. Those in default can pursue loan rehabilitation, which takes nine on-time payments over 10 months.

The new law lets borrowers go through rehabilitation up to two times, double the old limit. Anyone who gets a wage garnishment notice can request a hearing to argue financial hardship and ask for a lower amount.

Income-Based Repayment no longer requires proof of hardship under the new law.

About 8 million borrowers sit in limbo

Roughly 8 million borrowers on the SAVE plan are stuck waiting, with interest building, but payments paused.

If they default at the same rate as others, the total number of borrowers in financial trouble could reach 17 million or more.

A new Repayment Assistance Plan should launch in July 2026, with payments between 1% and 10% of discretionary income. Starting in 2026, forgiven loan amounts under income-driven plans count as taxable income.

The Office of Federal Student Aid lost 42% of its staff in 2025.

This article was created with AI assistance and human editing.

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