‘It would destroy me': fear of student loan default haunts US borrowers

The Guardian

20 hours ago

When David* logs into the online portal for his federal student loans, he sees some big numbers staring back at him: he owes more than $27,000 in his own name, plus about $63,000 in loans that are co-signed with his father but that he pays off himself.
'It's sort of an inconceivable amount to think about paying off anytime soon,' says David, a 26-year-old in Seattle who graduated as a political science major in 2021, and now works for a non-profit. 'You almost never see yourself paying it off.'
The worst part for David is that, next to information about his debts, it says in large red letters: 'PAST DUE.'
David says right now repayments of about $500 a month are needed for his loan debts, which 'feels crushing' after rent and utilities of about $1,500 a month in Seattle. He missed loan repayments for the month of June.
About 5.8 million federal student loan borrowers – roughly 31% – were 90 days or more past due on their payments as of April 2025, according to analysis from TransUnion, as delinquency and default rates soar in the wake of pandemic-era repayment relief ending.
US federal student loan debt is worth almost $1.7tn, with 42.7 million people owing some form of federal loan debt. And in May, the Trump administration resumed collecting on defaulted student loans after a five-year pause started during the pandemic.
About 1.8 million borrowers are at risk of falling into default – which occurs once they are 270 days past due – making them subject to wage garnishment and other collection actions by the Department of Education, and having a ruinous impact on people's credit scores.
While the $27,000 loans in David's name are currently in forbearance, it is those co-signed by his father that are not – and past due. He says when he missed a payment it caused friction in their relationship.
'My dad's credit score dropped by like 50 points,' David says. 'It's difficult to navigate that. He was angry.'
Michael James, a 26-year-old in Sioux City, Iowa, studied at Iowa State University and then the University of South Dakota. But, before graduating, he was forced to stop full-time studying and take on full-time work for financial reasons.
Five years on from leaving his studies unfinished, James owes almost $18,500 in federal student loan debt. Even though his loan is currently in forbearance – which means he's not paying anything towards it, but interest keeps climbing – he's 'immensely' worried about defaulting.
'A default would absolutely destroy me for the next 10 years of my life, there's no amount of hard-working that's going to remove a default from a credit file,' he says.
Barbara, a 62-year-old in Auburn, Maine, has found that even paying hundreds of dollars a month for more than two decades hasn't stopped the debt hanging over her due to eye-watering interest.
Barbara borrowed about $60,000 in federal student loans for a master's program in psychiatric nursing at New York University, graduating in 2001. She paid off at least $66,000 over 20 years, but due to interest, she still owes nearly $61,700, according to documents shared with the Guardian.
Barbara said her husband would like to retire, and she's trying to put money towards retirement, too, but the debt is stopping her. One of her loans even has an estimated repayment year of 2054. 'I'll be 91,' she says.
Federal student loans cannot typically be discharged in bankruptcy court, unlike other forms of loan, which Barbara and other borrowers want to see changed.
Barbara says she's currently putting two kids through college and trying, as far as possible, to help them do it without federal student loans.
'I don't want them to get caught with that noose around their necks,' she says.
Over the Fourth of July weekend, Sean Redmond's wife and children – an eight-year-old son and three-year-old twins – traveled from their home in Perkasie, Pennsylvania, to upstate New York to see family.
But Redmond, 46, stayed behind, working overtime at his job in pharmaceutical manufacturing. He has federal student loan debt of $61,696, and after a period of forbearance which ends on 30 August, he'll need to pay $806 a month.
'I know I have the ability to get extra hours to get the money to pay it, it's just more of an annoyance, a hassle,' Redmond says. It means more evenings and weekends sacrificed to working overtime, less time spent with his family.
'I had hopes for Trump when he got elected and he talked about dismantling the Department of Education and stuff,' Redmond says. He thought this might have meant federal student loans being able to be canceled on the same terms as other loans in bankruptcy court. But Redmond found it 'disappointing' that the Trump administration later said what remains of the department will continue to govern student debt.
Peter is a 31-year-old museum worker in Washington state. After graduating with a fine arts degree in 2016, he has nearly $22,000 to repay in federal loans.
He says education in the US is 'unnecessarily expensive', and that even with the relative security of full-time work, it's a financial struggle as 'the cost of living is becoming more and more extreme'.
Peter is not currently at risk of default, because he's implemented an income-driven repayment plan. But he said the idea of paying off the loans seems far-fetched.
It's 'a very important thing for our society' to have people working in the arts, he said, 'and I push back on the idea that, 'Well, you should have just got a degree in something else' – that minimizes the value of the arts'.
Peter, however, says he can't imagine a future in which he's free from debt: 'It's like a staple of American life, that you're in debt in some way, shape or form.'
*Some names changed