Federal Student Loan Defaults Return After Pandemic Pause

Jacob, Zara; Lee, Donghoon; Mangrum, Daniel; Scally, Joelle; Van der Klaauw, Wilbert

doi:10.59576/lse.20260512

Discussion Paper

Federal Student Loan Defaults Return After Pandemic Pause

Abstract: During 2026:Q1, household debt balances increased slightly, by $18 billion, to reach $18.8 trillion, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Amid upticks in mortgage, HELOC, and auto balances and a seasonal decline in credit card balances, student loan balances remained unchanged. However, the share of student loan balances past due increased, nearing pre-pandemic levels at just over 10 percent. In this post, we focus on which borrowers entered default on their federal student loans over the past two quarters. We find that the average borrower entering default is nearly 40 years old, was not past due on their student loans prior to the pandemic, and is more likely to live in the South. While defaulted borrowers are more likely to be past due on other forms of debt, the overall scope of student loan defaults is still relatively low, suggesting that fears of broader contagion to other credit products are premature.

JEL Classification: G51; D14;

https://doi.org/10.59576/lse.20260512