Are Your Student Loans In Default? Here's What's Happening

As a result of the Trump administration ending pandemic-era protections, student loan defaults have surged over the last year.

According to AP, one in five federal student loan borrowers is currently in default on their loans. That means 9.5 million people are currently behind on their student loan payments by nine months or more. Out of $1.7 trillion in federally backed student loans nationwide, $233.3 billion is in default. 

Mississippi has the nation’s highest default rate at 28.3%, with Louisiana, Alabama, West Virginia, Oklahoma, Georgia, South Carolina and Texas not far behind. The other 15 states with the highest default rates are Alaska, Arizona, Ohio, Indiana, Michigan, New Mexico and Nevada.

So, to quote not-Tucker Carlson, why is this happening? What’s going on? Well, there are a couple of reasons. 

In 2020, former President Joe Biden issued a freeze on student loans given the widespread layoffs and financial strife that came as a result of the pandemic. Payments restarted in 2023, though a one-year grace period was instituted until the fall of 2024. During this period, student loans couldn’t enter into default, and the federal government created programs like the income-based SAVE repayment plan to help borrowers get back on track with their payments.

All that goodwill immediately went out the window once President Donald Trump took office for his second term last year. 

The Trump administration ended the SAVE plan, meaning those who were enrolled will have to make substantially higher monthly payments. People were already struggling to repay their loans, and the SAVE plan’s cancellation is only going to lead to more defaults. 

The Trump administration has also been bullish about garnishing wages of people who are behind on their loans and referring defaulted loans to debt collectors. This has also resulted in credit scores plummeting for millions of Americans. 

Nothing says Trump cares about working-class Americans quite like ending the most generous income-based repayment plan and then bringing in debt collectors when borrowers can’t pay their bills. 

It doesn’t help that recent grads are entering one of the most brutal and competitive job markets in decades. Even folks with jobs are struggling to make ends meet as wages aren’t remotely keeping pace with the rising inflation stemming from the war in Iran. 

“Folks are struggling to make ends meet and cover all the rising costs of everything else. The growing student loan bills are making things worse and folks are falling behind,” Aissa Canchola Bañez, policy director for the advocacy group Protect Borrowers, told AP.

So, taking a top-down view of the economy, we’ve got more student loans in default, more people taking on credit card debt to afford groceries, credit card delinquency reaching highs not seen since the Great Recession, a weak job market, and homeownership becoming increasingly out of reach for younger people. Instead of doing anything to address these issues meaningfully, the GOP is funding an unpopular war and trying to rig elections in their favor. 

I will never understand how they have the reputation as the party for the working class.

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Are Your Student Loans In Default? Here's What's Happening was originally published on newsone.com