Federal data shows more than five million student loan borrowers were in default as of June 2025. An additional four million are in late-stage delinquency and could default soon.
Defaulting carries significant costs, including interest charges, wage garnishment, and withheld tax refunds. Borrowers in default lose eligibility for federal aid, deferment, and forbearance, and their credit scores may suffer.
Loans become delinquent after a missed payment. If unpaid for 90 days, the delinquency is reported to credit bureaus, potentially lowering credit scores for years. Continued non-payment risks default.
For the most common federal Direct Loans and FFEL Program loans, default occurs after 270 days without payment. Perkins Loans, last issued in 2017, have different standards where a single missed payment could trigger default.
The Department of Education resumed collections on defaulted loans in May 2025, after a pause since 2020. Borrowers receive notice before actions like wage garnishment begin.
To exit default, borrowers should contact their loan servicer. Options include full repayment, loan consolidation, or loan rehabilitation. Rehabilitation requires nine on-time monthly payments over ten months for Direct and FFEL loans, with similar terms for Perkins Loans. A borrower can only rehabilitate a loan once, though changes in the One Big Beautiful Bill Act will allow two rehabilitations starting July 1, 2027.
Consolidation rolls the debt into a new Direct Consolidation Loan, typically under an income-driven repayment plan. Making three consecutive payments before consolidation is another path. Consolidation restores benefits like deferment, but the default remains on credit reports.
If wages are already garnished, consolidation may require the garnishment order to be lifted first. During rehabilitation, garnishment may continue until the loan exits default or after five payments.
For private student loans, default timelines vary by lender, often within 120 days of the first missed payment. Federal rehabilitation and consolidation are not available; borrowers must contact their lender or collections agency for options like reduced payments.