Student Loan Defaults Surge as the Government Escalates Collections Efforts

Federal student loan defaults are surging, suggests a new analysis released this week. The new data comes as the federal government ramps up collections efforts against defaulted borrowers, with the first official wage garnishment notices expected to be issued this week.

“Default is financially devastating for student loan borrowers and their families,” said Protect Borrowers in a letter this week to Education Secretary Linda McMahon. “Before the COVID-19 pandemic, nearly 1 in 5 student loan borrowers were in default. A new analysis by Protect Borrowers shows that over the first year of the Trump Administration, borrowers defaulted every 9 seconds. This startling estimate marks an unprecedented default crisis nearly three times worse than the year prior to the COVID-19 pandemic, when 1.22 million borrowers defaulted on a student loan—then equivalent to a new default every 26 seconds.”

Here's what’s going on with student loan defaults and what borrowers should know.

Student loan defaults are surging

There seems to be near-universal agreement that defaults on student loans are steadily rising.

“At the start of the pandemic pause in March 2020, 8.6 million borrowers were in default,” said The Institute for College Access And Success (TICAS) in a blog post last month. “While a portion of those borrowers resolved their default during the pause—either through the ‘Fresh Start’ program or via having their debt discharged—new ED data released in November show that as of October 2025, more than 5.5 million borrowers with over $140 billion in outstanding federal student loans were in default.” 

And the number of borrowers in default on their federal student loans is expected to grow as more borrowers gradually become more than 270 days past due, the threshold for defaulting under federal rules.

“1.17 million borrowers were 30-89 days delinquent,” in October 2025, said TICAS. “1.56 million were 90-269 days delinquent, and 3.68 million were 270+ days delinquent.”

“34.4% of recipients, or more than six million recipients, are more than 30 days delinquent on their accounts,” echoed the Education Department itself in an analysis released earlier last summer. “This includes more than four million recipients in late-stage delinquency who are at risk of defaulting in the next six months.”

The new analysis by Protect Borrowers sheds even more light on the student loan default crisis.

“Protect Borrowers’ analysis shows that by the end of 2025, student loan borrowers had defaulted on debts totaling more than $92 billion—bringing the total number of borrowers whose debts meet the legal definition of a student loan default to nearly 9 million people nationwide,” said the group on its website. “Nearly two-thirds of the borrowers who defaulted during the Trump Administration—more than 2.6 million people—live in states that President Trump won in the 2024 election.”

Government steps up collections efforts against defaulted student loan borrowers

As more borrowers fall into default on their federal student loans, the Trump administration is escalating involuntary collections efforts against them. Last year, the Education Department began referring defaulted federal student loan borrowers to the Treasury Offset Program, which allows the government to intercept federal tax refunds and offset federal benefits and income streams. Treasury Offset also allows the government to offset Social Security payments, although the Education Department abruptly suspended Social Security offset last year after a backlash. 

This week, the Education Department is poised to reinitiate administrative wage garnishment, which allows the government to seize up to 15% of a defaulted student loan borrower’s paycheck. The department can do this without filing a lawsuit or obtaining a court order; the government has administrative powers that allow for the initiation of wage garnishment after a formal notice is issued to the borrower at their last known address. The first administrative wage garnishment notices are expected to go out this week. 

“The Department has unparalleled powers to collect on borrowers who have fallen into default—all without a court order—making it one of the most aggressive debt collectors in the nation,” said Protect Borrowers in its letter to Secretary McMahon. “Through AWG, the Department has the ability to force employers to extract hundreds of dollars each month directly from a borrower’s paycheck… The decision to resume wage garnishment against millions of borrowers amidst a growing affordability crisis crushing working families is calloused and unnecessary.”

“This is not a personal failure – it is a failure of the Department of Education,” said Natalia Abrams, President and Founder of the Student Debt Crisis Center (SDCC), in a statement on Thursday. “In just one year under the Department’s current leadership, a 50% workforce reduction has coincided with an 800,000 application backlog for Income-Driven Repayment plans, harming millions of families and communities. These actions will only add to the confusion and delays. With more than 5 million Americans already in default and millions more at risk, the Department is choosing punishment over protection by garnishing wages and tax refunds. It must immediately halt these actions and protect Americans’ livelihoods.”

What defaulted student loan borrowers can do

Borrowers who are in default on their federal student loans should start exploring their options now, ideally before they receive a Treasury Offset or Administrative Wage Garnishment notice.

“As the Department of Education prepares to seize wages and tax refunds, SDCC is urging borrowers who have defaulted on their federal student loans to explore their options,” said SDCC in its statement.

Borrowers in default on their federal student loans can explore default resolution programs like Direct Loan consolidation and loan rehabilitation. Those who resolve their defaults or enter into a rehabilitation agreement before they are in Treasury Offset or Administrative Wage Garnishment may be able to avoid both. Borrowers in default on their federal student loans can also potentially qualify for administrative discharge programs, such as the Total and Permanent Disability Discharge (TPD) program.

“Apart from fully paying off your loans, there are generally two ways to get your federal student loans out of default: Borrow a new consolidation loan that will collect your defaulted loans, or rehabilitate your loans,” says the National Consumer Law Center on its Student Loan Borrower Assistance blog. “In addition, you may be eligible to have your loans cancelled through a loan cancellation or discharge program, which would also stop collection. Each of these options have different pros and cons,” however, which borrowers need to consider. 

Borrowers should also ensure that their contact information is up to date with their student loan servicer and the Department of Education to make sure they don’t miss any important notices.