Over 10 Million Student Loan Borrowers Are Behind on Payments

More than 10 million federal student loan borrowers are behind on their payments, with wage garnishment, Social Security offsets, and credit score damage now back on the table. The overhang is one of the clearest signals yet that the post-pandemic consumer is finally cracking.

The scale of the problem

A record number of federal student loan borrowers have fallen into default as pandemic-era protections fade, with roughly 9.5 million borrowers now in default, up from 5.3 million in June 2025 — meaning nearly one in five federal student loan borrowers is at least nine months behind on payments.

Nearly 43 million borrowers owe more than $1.6 trillion in student debt, the Education Department said in April. The delinquency wave is layering on top of stubborn inflation and higher monthly bills across household budgets.

Wages and Social Security in the crosshairs

A student loan typically enters default after a borrower fails to make payments for 270 days. Once that happens, collection activity can eventually include wage garnishment and Treasury offsets that seize tax refunds or certain federal payments.

Defaults are expected to climb. TransUnion estimated that roughly three million borrowers would default by August, triggering the risk of wage garnishment of up to 15%, with another two million on track by this month.

Do you want to see how to make more plays? Do you want to find gains yourself?

Unusual Whales helps you find market opportunities through our market tide, historical options flow, GEX, and much, much more.

Create a free account here to start conquering the market with Unusual Whales.

Credit scores are already taking the hit

A new student loan delinquency can cause a borrower’s credit score to drop more than 150 points, the Fed warns. That is a direct hit to a consumer’s ability to finance a car, a home, or even a credit card at a workable rate.

After the pandemic-era pause, which shielded borrowers from credit score damage, ended last fall, millions have seen their credit ratings decline as missed payments pile up.

Forbearance is masking the pain

Higher education analyst Mark Kantrowitz found that 10.3 million borrowers were in forbearance in the third quarter of this year, compared to 2.9 million last year. Another 3.4 million borrowers deferred their loans in Q3 2025, up from 3.2 million.

Time spent in forbearance or deferment can be costly; with an average balance of about $39,000 at a 6.7 percent interest rate, borrowers rack up about $219 a month in interest charges alone.

Options market and stocks to watch

The knock-on effects touch consumer credit, discretionary spending, and lenders directly. Watch these names as the delinquency wave plays out:

• SLM — Sallie Mae is the most direct read on private student lending sentiment and credit trends.
• NAVI — Navient sits squarely inside the student loan servicing and refi ecosystem.
• SOFI — SoFi’s refi business benefits from stressed borrowers seeking lower rates, but wider credit weakness can bite.
• SYF — Synchrony leans on subprime and near-prime consumers, a cohort that overlaps heavily with delinquent student borrowers.
• COF — Capital One is a broad gauge for card delinquencies if student loan stress bleeds across household balance sheets.

For more coverage on macro and consumer credit, see other news on Unusual Whales.

Want more market intelligence? Create your free Unusual Whales account for options flow, market tide, GEX, and the full toolkit.