Student Loan Defaults Hit Record as 2.6 Million Borrowers Fall Behind

Federal student loan defaults have hit record levels in 2026, with roughly 2.6 million borrowers falling more than nine months behind on payments and total defaults reaching approximately $233 billion.

The surge follows the termination of the SAVE income-driven repayment plan and the rollout of new repayment options under the One Big Beautiful Bill Act, which took effect July 1, 2026. Many borrowers who were enrolled in SAVE received notices to transition to new plans within a 90-day window, and some missed the deadline or struggled to navigate the changes.

The new Repayment Assistance Plan, or RAP, calculates monthly payments as 1 to 10 percent of a borrower's adjusted gross income. It includes an interest waiver for borrowers whose payments do not cover accruing interest, preventing balances from growing. But borrowers who did not enroll in any plan fell into delinquency.

The Department of Education has resumed wage garnishment for borrowers in default, a process that was paused during the pandemic and its aftermath. Borrowers in default can also face tax refund seizures and damage to their credit scores.

Advocates for borrowers say the transition period was too short and that many people did not receive adequate notice about their options. They are calling on the department to pause collections for borrowers who missed the enrollment window due to confusion rather than unwillingness to pay.

The Grad PLUS loan program has also ended for new borrowers, and new lifetime limits have been placed on graduate and parent PLUS loans. Some graduate students are now turning to private loans to cover costs that federal programs no longer support.