Student Loans For 6.4 Million Borrowers Are Heading Toward A Dangerous ‘Cliff’

A large number of Americans are struggling with their federal student loans. And millions of borrowers are heading toward a default cliff, with potentially major financial consequences, warned an advocacy group last week.
When the Covid-19 era forbearance on most federal student loans ended in 2023, more than five million borrowers collectively owing nearly $117 billion in federal student debt were already in default. Since then, millions of additional borrowers have fallen behind on their student loan payments as a result of the end of pandemic-era flexibilities, student loan servicing challenges, and a seemingly never-ending torrent of changes to repayment and student loan forgiveness programs. As a result, the number of borrowers in default on their federal student loans could more than double within a few months.
The bottom line is that millions of Americans carrying federal student loans are struggling. A new survey released by a student loan borrower advocacy group last week sheds new light on the scope of the crisis. Here’s a breakdown.
Student Loans Are Careening Toward Default
Federal student loan defaults had stabilized during and after the pandemic-era forbearance period. During that time, negative credit reporting and collections efforts against borrowers in default on their federal student loans were largely suspended. But with those flexibilities now long expired, these borrowers are now starting to feel the impacts as negative credit reporting and collections efforts resume. And there is near-universal agreement that the problem is about to significantly worsen.
“Approximately 5.3 million ED-serviced borrowers with nearly $117 billion in outstanding federal student loans are in default as of June 2025, representing seven percent of the total $1.58 trillion portfolio,” said the Education Department in an update last summer. “While no new borrowers have defaulted since March 2020 due to the payment pause, many delinquent borrowers are in danger of defaulting in the coming months.”
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That prediction appears to have been correct. “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,” said The Institute for College Access and Success, or TICAS, in a blog post earlier this month. “In addition, 1.17 million borrowers were 30-89 days delinquent, 1.56 million were 90-269 days delinquent, and 3.68 million were 270+ days delinquent.”
Borrowers typically will default on their federal student loans once they are more than 270 days delinquent. Thus, the total number of defaulted federal student loan borrowers could skyrocket to more than nine million within a matter of weeks, with several million more to follow in the subsequent months.
TICAS characterized the situation as a “default cliff,” whereby “an unprecedented number of borrowers struggle so much to repay their loans that they default on their payments in droves.”
Borrowers Are Struggling With Their Student Loans
There are number of possible reasons why millions of federal student loan borrowers are heading toward a default cliff. Many borrowers simply may not be able to afford their monthly payments on their student loans, as years of non-payment coupled with significant increases in the cost of living nationwide has resulted in little financial flexibility to suddenly take on a new payment obligation. In addition, the Trump administration and Republican lawmakers have taken steps to close the door on more affordable repayment plan options, forcing many borrowers either into a forbearance or into costlier repayment plans. For example, last week the Education Department entered into a settlement agreement to end the SAVE plan, the most affordable income-driven repayment option available for most borrowers.
Meanwhile, borrowers are contending with significant disruptions to student loan servicing, including millions of transfers to new loan servicers during the last several years, and challenges in getting assistance from customer service representatives. These servicing changes, coupled with the near-constant changes to federal student loan programs, has made it challenging for borrowers to get accurate, up-to-date information on their options.
Results from a new survey by TICAS and Data for Progress released earlier in December shed new light on Americans struggling to repay their student loans.
“More than four in ten borrowers (42%) report making tradeoffs between loan payments and covering their basic needs, and one fifth (20%) of those surveyed said they are currently in either delinquency or default,” said TICAS in its blog post analyzing the survey results. “In addition, too few borrowers know about ways to lower their monthly payments or access debt relief: 15 percent of borrowers report having heard ‘nothing at all’ about income-based repayment plans, while half (51%) report having heard only ‘a little.’ Nearly one-quarter of borrowers (23%) haven’t heard anything about the Public Service Loan Forgiveness program, and fewer than half (47%) of borrowers are aware of a program that discharges loans for borrowers with severe disabilities.”
A lack of trust in the Education Department and its contracted student loan servicers appears to be contributing to the problem.
“Nearly two thirds of borrowers (58%) report having little trust that the federal government will help keep their loans affordable,” said TICAS. In addition, a substantial portion of borrowers reported communication difficulties with their student loan servicer (such as long call hold times) or receiving inaccurate information.
“Ultimately, borrowers today have fewer resources than ever to navigate their repayment options, and those options are ever shifting,” said TICAS. “The Education Department has been gutted, with hundreds of experts now gone from the Office of Federal Student Aid, which administers the federal student loan program and oversees the federal government’s contracted loan servicers. These cuts have eroded the Department’s ability to identify and correct servicing issues and to properly communicate with borrowers. Meanwhile, servicers are scrambling to comply with a stream of changes to the repayment system driven by the recently enacted reconciliation law and ongoing legal challenges to the SAVE repayment plan. For many borrowers, this is likely to mean default.”
Options For Student Loans In Default
Defaulting on federal student loans can have serious consequences for borrowers. In addition to negative credit reporting, which can interfere with the ability of people to obtain housing, transportation, or employment, the government has powerful tools to collect against defaulted borrowers. These include administrative wage garnishment, the interception of federal tax refunds, and the offset of federal income and benefits, including Social Security. The Education Department announced earlier this year that collections efforts against defaulted federal student loans would resume (although Social Security offsets were temporarily paused).
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon in a statement in April. “Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment—both for the sake of their own financial health and our nation’s economic outlook.”