WASHINGTON: US student loan defaults reached a record 9.5 million borrowers, or one in five federal borrowers, with the highest rates concentrated in the South.
Office of Federal Student Aid data showed that borrowers had defaulted on $233.3 billion of the country’s $1.7 trillion in federally backed student debt.
Federal loans generally enter default after borrowers miss payments for at least 270 days. Federal student loan payments resumed in 2023. However, a one-year buffer during the Biden administration prevented loans from entering default until autumn 2024.
Defaults began rising again in June 2025, increasing the affected population from 5.3 million to 9.5 million, according to the AP analysis.
Mississippi recorded the highest state default rate at 28.3%. Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina and Texas also ranked among the worst-affected states. Puerto Rico’s 30.9% rate exceeded that of every state.
Federal data also showed that 33% of borrowers who attended for-profit colleges were at least 90 days behind. That rate was more than double the figure for public-school borrowers.
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For-profit institutions accounted for 76% of schools in the highest quartile for nonpayment rates. Repayment pressure could increase after a court-approved settlement ended the Saving on a Valuable Education, or SAVE, Plan in March.
The Department of Education directed 7.5 million former SAVE participants to select another repayment plan.
New borrowers can now choose between the Tiered Standard plan and the income-driven Repayment Assistance Plan. The two options became available on July 1, according to the Department of Education.
The administration of US President Donald Trump has paused Treasury offsets and administrative wage garnishment. However, unresolved defaults can eventually result in the government withholding tax refunds, federal benefits or up to 15% of a borrower’s disposable wages.
