Student loan default in the United States

Defaulting on a loan happens when repayments are not made for a certain period of time as defined in the loan's terms of agreement, typically a promissory note. For federal student loans, default requires non-payment for a period of 270 days.^[1] For private student loans, default generally occurs after 120 days of non-payment.^[2]

As of 2025, outstanding federal student loan debt exceeded $1.6 trillion.^[3]

Defaulter demographics

According to analysis of borrowers from the 2003-2004 academic year over a twelve-year period, defaulters generally tend to be older, lower income, and more financially independent than those who did not default. Borrowers typically owe $9,625, which is $8,500 less than the median loan balance of a non-defaulter. The majority of defaulters did not complete their bachelor's degree, but the median completed at least one year of study while maintaining grades in the C+/B- range. This shows that defaulters are able to complete college level work. Furthermore, most borrowers do not immediately enter default - the median borrower takes 33 months to enter default on their federal loans. Generally, a little more than half of all defaulters are able to rehabilitate their debt.^[4]

Debt rehabilitation

There are a number of paths to resolving student debt default, including:

• Completing 10 months of agreed upon payments
• Repayment via debt consolidation or other types of loans
• Discharge via total and permanent disability
• Discharge via bankruptcy

See also

• Bankruptcy Abuse Prevention and Consumer Protection Act
• Cohort Default Rate
• Default (finance)
• Garnishment
• Higher Education Act of 1965
• Loan
• Student loans in the United States