2.6 million student loan borrowers defaulted in Q1 2026: New York Fed
Vladimir Vladimirov | E+ | Getty Images
Millions of student loan borrowers have recently defaulted on their loans, according to new data from the Federal Reserve Bank of New York.
According to the New York Fed’s report, approximately 1 million borrowers defaulted in the fourth quarter of 2025 and 2.6 million borrowers defaulted in the first quarter of 2026. a blog post Tuesday.
New defaults were concentrated among older borrowers, residents of Southern states and people who had defaulted on federal student loans before the pandemic, the researchers wrote.
The researchers also said “a second wave of defaults could emerge” as millions of borrowers enrolled in the Biden-era Value Education Savings plan are forced to begin repayments. A federal appeals court struck down the SAVE plan earlier this year. Borrowers enrolled in SAVE have been exempt from making payments since summer 2024.
Defaults ‘may have repercussions on credit area’
The rise in student loan defaults comes as more borrowers show up It must resume payments after years of relief.
For more than three years, more than 40 million people with federal student loans have been unable to make payments due to the Covid pandemic. Then, between October 2023 and October 2024, the U.S. Department of Education still did not report late payments to credit bureaus during the “surge” period.
New York Fed researchers noted that student loan defaults first appear on consumers’ credit reports in the fourth quarter of 2025, as it typically takes 270 days of no payments for the debt to reach that status.
Before the pandemic, approximately 7.7 million student loan borrowers were in default, according to the Department of Education data.
“The ripples of this wave could continue to reverberate across the credit landscape if financial difficulties from defaulted loans spread across the credit profiles of family members and collections on defaulted loans eventually resume,” New York Fed researchers wrote.
The federal government has extraordinary collection powers over student loans and can seize borrowers’ tax refunds, paychecks, and Social Security retirement and disability benefits. However, for now, this collection activity is on hold.
