One Million Student Loan Borrowers Defaulted At End Of 2025

February 26, 2026 10:56 pm
The exchange for the debt economy
Source: site
image

Feb 26, 2026

A significant number of federal student loan borrowers entered default status at the close of the previous year, according to data from the Federal Reserve Bank of New York. The latest Household Debt and Credit Report indicates that around one million borrowers saw their loans default at the end of 2025.

This development follows a broader trend of rising delinquencies over the past year. Currently, 9.6% of the total student loan balance is at least 90 days delinquent, with a growing portion moving into serious delinquency. Analysts suggest defaults may continue to climb in the coming months.

Resumption of Payments Drives Delinquency

The increase is largely attributed to the resumption of standard payment reporting after an extended pandemic-era forbearance period. Following years of paused payments, many borrowers resumed obligations in 2023. A subsequent one-year grace period, during which missed payments were not reported to credit agencies, concluded in September 2024.

Since that time, delinquency rates have grown. Data from Federal Student Aid showed that by June 2025, over six million recipients of federal student loans, representing 34.4% of such borrowers, were more than 30 days behind on payments. More than four million of those were in serious delinquency and at risk of default within six months.

Quarterly data illustrates a sharp acceleration in accounts transitioning to serious delinquency throughout 2025. The rate rose from 0.70% at the end of 2024 to 12.88% by the second quarter of 2025, then to 14.26% in the third quarter, reaching 16.2% in the final quarter of the year.

Path to Default and Consequences

A federal student loan becomes delinquent immediately after a missed payment. After 90 days of non-payment, it enters serious delinquency and is typically reported to credit bureaus, which can significantly lower a borrower’s credit score. If no action is taken, default occurs after approximately 270 days of missed payments, or about nine months.

Default carries severe consequences, including ineligibility for deferment, forbearance, or additional federal student aid, and the entire loan balance becomes immediately due. It can also lead to involuntary collections from wages or tax refunds. While the U.S. Department of Education has temporarily delayed such collections to implement repayment reforms passed into law last year, the department describes this pause as temporary.

Options for Borrowers in Default

Borrowers whose loans have entered default have two primary avenues to regain standing: loan rehabilitation or loan consolidation. Rehabilitation requires a written agreement to make nine reasonable monthly payments within ten consecutive months. The payment amount is based on a percentage of the borrower’s annual discretionary income. Successfully completing this one-time program removes the default record from the borrower’s credit history.

Starting in 2027, borrowers will be eligible for a second chance to rehabilitate a defaulted loan. After rehabilitation, eligibility for benefits like deferment and loan forgiveness is restored.

Consolidation involves combining loans into a new Direct Consolidation Loan. To use this method to exit default, a borrower must either agree to repay under an income-driven plan or make three consecutive on-time payments on the defaulted loan before consolidation. While consolidation restores federal loan benefits, the record of the default remains on the borrower’s credit history. Under both options, records of missed payments reported during delinquency remain on the credit report.

Source: IndexBox Market Intelligence Platform

  1. 1. INTRODUCTION

    Making Data-Driven Decisions to Grow Your Business

    1. REPORT DESCRIPTION
    2. RESEARCH METHODOLOGY AND THE AI PLATFORM
    3. DATA-DRIVEN DECISIONS FOR YOUR BUSINESS
    4. GLOSSARY AND SPECIFIC TERMS

  2. 2. EXECUTIVE SUMMARY

    A Quick Overview of Market Performance

    1. KEY FINDINGS
    2. MARKET TRENDS This Chapter is Available Only for the Professional EditionPRO

  3. 3. MARKET OVERVIEW

    Understanding the Current State of The Market and its Prospects

    1. MARKET SIZE: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    2. CONSUMPTION BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    3. MARKET FORECAST TO 2035

  4. 4. MOST PROMISING PRODUCTS FOR DIVERSIFICATION

    Finding New Products to Diversify Your Business

    1. TOP PRODUCTS TO DIVERSIFY YOUR BUSINESS
    2. BEST-SELLING PRODUCTS
    3. MOST CONSUMED PRODUCTS
    4. MOST TRADED PRODUCTS
    5. MOST PROFITABLE PRODUCTS FOR EXPORT

  5. 5. MOST PROMISING SUPPLYING COUNTRIES

    Choosing the Best Countries to Establish Your Sustainable Supply Chain

    1. TOP COUNTRIES TO SOURCE YOUR PRODUCT
    2. TOP PRODUCING COUNTRIES
    3. TOP EXPORTING COUNTRIES
    4. LOW-COST EXPORTING COUNTRIES

  6. 6. MOST PROMISING OVERSEAS MARKETS

    Choosing the Best Countries to Boost Your Export

    1. TOP OVERSEAS MARKETS FOR EXPORTING YOUR PRODUCT
    2. TOP CONSUMING MARKETS
    3. UNSATURATED MARKETS
    4. TOP IMPORTING MARKETS
    5. MOST PROFITABLE MARKETS

  7. 7. PRODUCTION

    The Latest Trends and Insights into The Industry

    1. PRODUCTION VOLUME AND VALUE: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    2. PRODUCTION BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)

  8. 8. IMPORTS

    The Largest Import Supplying Countries

    1. IMPORTS: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    2. IMPORTS BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    3. IMPORT PRICES BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)

  9. 9. EXPORTS

    The Largest Destinations for Exports

    1. EXPORTS: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    2. EXPORTS BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
    3. EXPORT PRICES BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)

  10. 10. PROFILES OF MAJOR PRODUCERS

    The Largest Producers on The Market and Their Profiles

  11. 11.

    PRO

  12. LIST OF TABLES

    1. Key Findings In 2025
    2. Market Volume, In Physical Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    3. Market Value: Historical Data (2012–2025) and Forecast (2026–2035)
    4. Per Capita Consumption, by Country, 2022–2025
    5. Production, In Physical Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    6. Imports, In Physical Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    7. Imports, In Value Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    8. Import Prices, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    9. Exports, In Physical Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    10. Exports, In Value Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    11. Export Prices, By Country: Historical Data (2012–2025) and Forecast (2026–2035)

  13. LIST OF FIGURES

    1. Market Volume, In Physical Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    2. Market Value: Historical Data (2012–2025) and Forecast (2026–2035)
    3. Consumption, by Country, 2025
    4. Market Volume Forecast to 2035
    5. Market Value Forecast to 2035
    6. Market Size and Growth, By Product
    7. Average Per Capita Consumption, By Product
    8. Exports and Growth, By Product
    9. Export Prices and Growth, By Product
    10. Production Volume and Growth
    11. Exports and Growth
    12. Export Prices and Growth
    13. Market Size and Growth
    14. Per Capita Consumption
    15. Imports and Growth
    16. Import Prices
    17. Production, In Physical Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    18. Production, In Value Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    19. Production, by Country, 2025
    20. Production, In Physical Terms, by Country: Historical Data (2012–2025) and Forecast (2026–2035)
    21. Imports, In Physical Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    22. Imports, In Value Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    23. Imports, In Physical Terms, By Country, 2025
    24. Imports, In Physical Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    25. Imports, In Value Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    26. Import Prices, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    27. Exports, In Physical Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    28. Exports, In Value Terms: Historical Data (2012–2025) and Forecast (2026–2035)
    29. Exports, In Physical Terms, By Country, 2025
    30. Exports, In Physical Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    31. Exports, In Value Terms, By Country: Historical Data (2012–2025) and Forecast (2026–2035)
    32. Export Prices, By Country: Historical Data (2012–2025) and Forecast (2026–2035)

© Copyright 2026 Credit and Collection News

Privacy Policy