Nearly 13 million student loan borrowers could face default this year as Trump repayment crackdown ramps up
America’s student loan repayment system is entering one of its most challenging periods since federal payments resumed. New Department of Education data show that millions of borrowers are already delinquent or in default, and if current trends continue, more than 12.5 million borrowers could be behind on their federal student loans by the end of 2026.
The growing financial strain comes as the Trump administration accelerates repayment efforts, collections resume, the SAVE repayment plan disappears, and millions of borrowers prepare to transition into new repayment options that could significantly increase their monthly bills.
Nearly 13 million borrowers could be delinquent or in default. The latest Department of Education figures paint a concerning picture of the federal student loan portfolio.
As of the end of March, approximately 2.97 million federal borrowers were delinquent on their student loans, meaning they were between 30 and 270 days behind on payments. Another 9.57 million borrowers were already in default after missing payments for at least 271 days.
If those borrowers do not resume making payments, the total number of delinquent and defaulted borrowers could climb to roughly 12.54 million by the end of 2026.
Federal Reserve Bank of New York researchers also found that approximately 3.6 million borrowers entered default over two recent quarters, including about one million during the fourth quarter of 2025 and another 2.6 million during the first quarter of 2026.
Why the default surge matters
Falling behind on federal student loans can have lasting financial consequences.
Borrowers who become delinquent risk seeing their credit scores decline, making it more difficult to qualify for mortgages, auto loans and credit cards. Once a loan enters default after roughly 270 days without payment, the federal government can garnish wages, seize federal tax refunds and withhold portions of Social Security benefits.
The New York Fed reported that borrowers who recently defaulted saw their average credit score fall by 91 points, from 567 to 476. A default also remains on a credit report for seven years.
The Trump administration has also resumed efforts to collect on defaulted loans after years of pandemic-era relief and repayment pauses under former President Joe Biden.
Borrowers are entering a much stricter repayment environment
Financial experts say many borrowers never fully adjusted after more than three years without required payments.
Financial experts say the current repayment challenges stem in part from the pandemic-era payment pause, which lasted more than three years. They argue that the subsequent “on-ramp” period delayed credit reporting rather than resolving delinquency issues, while legal challenges to the SAVE plan, confusion among loan servicers, and extended forbearance periods left millions of borrowers with growing interest balances.
Borrowers are now facing a much different repayment landscape.
Student loan advocates say many borrowers are falling into default as the system shifts from years of pandemic-era payment pauses to a stricter repayment environment, where collections and wage garnishment have resumed while many borrowers remain uncertain about which repayment plan they qualify for.
Trump administration says repayment is no longer optional
Administration officials have repeatedly emphasized that federal borrowers should expect collections and repayment enforcement to continue.
“What we have been trying to do is explain to borrowers that loan forgiveness is not happening,” Nicholas Kent, undersecretary at the Department of Education, said earlier this year. “Not paying your loans is no longer an option, especially under this administration.”
Student loan advocates say many borrowers should prepare for higher monthly payments as the Trump administration intensifies its push to bring borrowers back into repayment. They also advise borrowers to review their repayment options and understand any potential tax implications before new bills arrive to avoid being caught off guard.
The end of the SAVE plan is increasing financial pressure
One of the biggest changes affecting borrowers this year is the end of the Biden administration’s Saving on a Valuable Education (SAVE) repayment plan.
Nearly 7.5 million borrowers who had enrolled in SAVE are now receiving notices directing them to choose a different repayment option within 90 days after the program was permanently ended following legal challenges.
Advocates said the transition could create additional financial stress.
Student loan advocates said current policies have contributed to repayment challenges by ending the SAVE plan transition, resuming collections on defaulted loans and moving borrowers into new or more expensive repayment options. The increase in defaults reflects confusion surrounding the repayment system rather than borrowers’ unwillingness to pay.
New repayment plans are replacing SAVE
Beginning July 1, borrowers gained access to two new federal repayment options designed to replace SAVE.
The Repayment Assistance Plan (RAP) ties monthly payments to income, generally ranging between 1% and 10% of earnings while establishing a $10 monthly minimum payment.
The new Tiered Standard Plan provides fixed monthly payments over repayment periods ranging from 10 to 25 years depending on the amount borrowed.
Borrowers already in default generally have two primary paths back into good standing. They can complete loan rehabilitation by making nine on-time payments within 10 months or consolidate their loans through a Direct Consolidation Loan, which typically takes four to six weeks.
Many borrowers expect significantly higher monthly payments. For many former SAVE participants, the biggest concern is the size of their new monthly payment.
Business Insider reported numerous borrowers expecting payment increases of several hundred dollars each month after transitioning from SAVE.
Some borrowers said they are taking second or third jobs, postponing retirement, delaying homeownership, reducing retirement savings or cutting household expenses to prepare for repayment.
Others fear they may be unable to keep up with the higher payments despite working full time.
Financial experts warned that borrowers who expected loan forgiveness or cannot afford their new payment amounts may quickly fall behind.
Student debt varies dramatically depending on education
Student loan balances differ significantly depending on the type of degree borrowers pursue.
The average bachelor’s degree recipient graduates with approximately $30,000 in student loan debt. The federal data, estimates the average federal student loan balance across all borrowers is roughly $40,000.
Professional degrees often carry much larger balances. For example, dental school graduates average around $300,000 in student debt, followed by medical graduates at roughly $230,000 and law graduates at approximately $150,000.
By comparison, community college graduates typically borrow about $10,000, while students in fields such as mechatronics, robotics, automation engineering and certain science technology programs often graduate with among the lowest debt levels because of shorter, less expensive programs.
What borrowers can do now
Experts say borrowers should not wait until they enter default before taking action.
Student advocates encouraged borrowers to review their accounts immediately. Log into StudentAid.gov and contact your servicer before default happens. If you’re already in default, ask about rehabilitation or consolidation.
Financial experts also recommend exploring available income-driven repayment options, reviewing eligibility for consolidation and maintaining communication with loan servicers before missed payments accumulate.
Millions of borrowers will continue exiting the SAVE plan throughout 2026 while transitioning into new repayment options.
At the same time, the Treasury Department is expected to resume broader collection efforts once the current pause on involuntary collections ends, potentially exposing more defaulted borrowers to wage garnishment, tax refund offsets and reductions in certain federal benefits.
With nearly 13 million borrowers already delinquent or in default; or on pace to reach that level by year-end; the coming months are expected to be a critical test of whether the new repayment system can successfully bring millions of Americans back into repayment without triggering an even larger wave of defaults.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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