Student loan default in the United States

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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]

Contents

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:

See also

References

  1. ↑ "Getting Out of Default". Federal Student Aid. Retrieved 2025-08-01.
  2. ↑ "Tips for paying off student loans more easily". Consumer Financial Protection Bureau. 2024-09-06. Retrieved 2025-08-01.
  3. ↑ Zota, Rita R. (2025-02-19). "A Snapshot of Federal Student Loan Debt". Congressional Research Service. Retrieved 2025-08-01.
  4. ↑ "Who Are Student Loan Defaulters?". Center for American Progress. December 14, 2017.
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