Student Loan Update: 400,000 More Borrowers In Default Under Trump Admin - Newsweek

The number of federal student loan borrowers in default continued to climb during the second quarter of 2026, with new government data showing an additional 400,000 borrowers fell into default status over a three-month period.

According to updated Federal Student Aid (FSA) data through June 30, 9.3 million borrowers were in default on their federal student loans, up from the prior quarter. The defaulted loans now total approximately $234 billion, representing about 14 percent of the federal student loan portfolio.

The increase comes as the Trump administration continues to overhaul the federal student loan repayment system following the end of the Biden-era SAVE repayment plan.

“The Trump administration has accelerated the return to normal repayment and collections, meaning borrowers who remain delinquent are now facing the consequences of default,” Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek.

Newsweek reached out to the Department of Education for comment via email.

“The Biden Administration undermined the federal student loan system—spreading the lie that student loans do not have to be repaid and delaying the inevitable consequences when borrowers do not make on-time payments," Ellen Keast, a spokesperson for the Education Department, told Newsweek.

"From extending payment pauses, discouraging servicers from working with borrowers, and promising unlawful student loan forgiveness, the previous Administration created mass confusion, and now millions of borrowers have not made a payment in months, if not years. We will continue to increase our support to borrowers who want to get back into regular, on-time repayment and ensure that American taxpayers are not left footing the bill for the policies they voted out of office.”

Borrowers who enter default face some of the harshest consequences in the federal student loan system.

Federal student loans generally enter default after 270 days of missed payments. Once in default, borrowers can see significant damage to their credit scores and may become subject to wage garnishment, tax refund offsets and even reductions to their Social Security benefits.

While the Department of Education has temporarily paused wage garnishment and the seizure of certain federal benefits, officials have indicated that the pause is not permanent and that they will begin resuming collections activities in the near future.

The latest FSA figures showed that 9.3 million borrowers were in default as of June 30. That marks an increase of roughly 400,000 borrowers from the previous quarter.

Borrowers in default now owe approximately $234 billion with defaulted debt accounts for about 14 percent of the federal student loan portfolio.

Meanwhile, an additional 1.5 million borrowers are in late-stage delinquency and could enter default within six months if they remain behind on payments.

“The strategy has been to emphasize the returning of borrowers to repayment while replacing SAVE and restructuring repayment options, but borrowers have simultaneously had to navigate new plans, changing deadlines and, in some situations, higher or newly restarted payments,” Alex Beene, financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

Experts say the new data reflects the larger student loan repayment challenges that emerged after pandemic-era relief measures ended.

The surge in defaults has followed the expiration of protections that were initially put in place during and after the COVID-19 pandemic.

Federal student loan payments were paused for several years during the pandemic, and the Biden administration later provided a one-year "on-ramp" period that prevented the most severe consequences for borrowers who missed payments after repayment resumed. However, now that those protections expired, delinquent loans have begun moving back into default status.

“I wouldn't pin this latest jump entirely on Trump administration policy as much as I'd like to,” Michael Ryan, finance expert and the founder of MichaelRyanMoney.com, told Newsweek.

“A lot of what we're seeing now is the delayed consequence of payments restarting after the pandemic pause and temporary protections ending. Also, borrowers who were already struggling eventually moving from delinquency into default.”

At the same time, the Trump administration has implemented major changes to the repayment system, including eliminating the Biden administration's SAVE plan and replacing it with a new repayment structure that took effect July 1.

Some borrowers have reported higher monthly payments under the new system, adding to the strain.

“Where Trump administration policies could matter more is what happens next. The administration ended SAVE through a court approved settlement. And millions of borrowers are now moving out of SAVE forbearance and back into repayment,” Ryan said.

“That's what I think is the next pressure point. Can those borrowers get into a payment they can actually afford before they fall behind?”

Under federal law, the government can garnish wages and withhold a portion of Social Security benefits from borrowers who remain in default. Although this practice has not yet been fully reinstated under the Trump administration, the Education Department has signaled that the current pause is temporary.

Since then, Democratic lawmakers have pushed back against those potential penalties.

In August, Senators Bernie Sanders, Elizabeth Warren and Ed Markey introduced legislation intended to shield seniors and borrowers with disabilities from having Social Security benefits garnished because of student loan defaults.

"As a result of Trump's disastrous cuts to education, an increasing number of seniors are in danger of having their Social Security checks garnished to pay back student loans they took out decades ago. That is beyond unacceptable," Sanders said in a statement.

Borrowers who are struggling to make payments are generally advised to contact their loan servicer before entering default.

Their options may include enrolling in an income-driven repayment plan or changing repayment plans. They can also seek deferment or forbearance if they’re eligible. Loan rehabilitation programs are also possible if a loan has already entered default.

“For borrowers, ignoring this is the worst option. Find out whether you're delinquent or already in default,” Ryan said. “If you're behind but haven't defaulted, contact the servicer now and look at the available repayment plans.”

For those already in default, rehabilitation or consolidation is a potentially viable option through the federal Default Resolution Group, Ryan said.

The default total could rise even further in the coming months.

Federal Student Aid data shows another 1.5 million borrowers are already in late-stage delinquency and could enter default in the coming months.

At the same time, the administration is preparing to transfer management of defaulted student loans to the Treasury Department, which could also reshape how collections are handled going forward.

Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.

Contact Newsweek editors on this story: Edward T. Cummins