Student Loan Default Rate: Facts and Statistics

According to the Federal Reserve Bank of New York’s Center for Microeconomic Data, at the end of 2021, roughly 3 million people owed more than $86 billion in defaulted student loans.^[2]

Defaulting on a student loan can result in severe consequences. The government may withhold your wages, and credit-reporting agencies could dock your credit score.

This report describes the state of student loan default in the U.S. We’ll cover how many people default after they leave college, how much they owe, and who is most likely to default on student loans.

Among all borrowers who entered student loan repayment in 2019, 2.3% (91,475) had defaulted by September 2021, according to the Department of Education (ED).^{Note Reference [1]}

That’s a massive drop from prior years. In the last decade, the student loan default rate ranged from a high of 11.8% in 2012 to a low of 7.3% in 2018.^{Note Reference [1]}

One reason behind this drop is likely the student loan payment pause, which the Biden administration announced in March 2020 due to the COVID-19 pandemic. Borrowers who entered repayment as early as 2018 may have been able to avoid default through the moratorium. Student loan payments are scheduled to resume in July 2023.

By the end of 2021, roughly 3 million people were in student loan default — that’s about 7% of all borrowers. Another 270,000 were 90-270 days delinquent on their student loans — meaning they missed a payment but hadn’t defaulted yet.^{Note Reference [2]}

The number of student loan borrowers in default has shrunk since its peak in 2016.^{Note Reference [2]}

Even though most borrowers in 2021 were current on their payments, the majority were sitting on a growing student loan balance. In other words, the amount they owed was larger than the amount they took out.

At the end of 2021, borrowers owed $86.08 billion dollars in defaulted student loans.^{Note Reference [2]}

Delinquent and defaulted borrowers actually tend to have lower student loan balances than borrowers in repayment.^{Note Reference [2]}

One-quarter of delinquent or defaulted student loan borrowers have debt balances under $6,200. That means their balances could be swiped clean if they qualify for student loan forgiveness under the Biden administration’s proposed plan — and if the proposal passes its upcoming Supreme Court trial.

The likelihood of someone missing payments on their student loans depends on different factors, including what school they attended and if they completed their degree. The student loan default rate also differs across race/ethnicity and income levels.

The three-year student loan default rate is the highest among people who attended private for-profit colleges, and it’s been that way for years.

The current three-year student loan default rate is:^{Note Reference [3]}

Before the student loan default rate took a plunge due to the pandemic-related payment pause, the three-year student loan default rate among borrowers who started repayment in 2017 was:^{Note Reference [3]}

The National Center for Education Statistics (NCES) reported that more than half (52.5%) of students at for-profit schools who started repaying federal student loans in 2003-2004 ended up defaulting at some point within the first 12 years of repayment. That’s about triple the default rate for four-year private schools (17.6%) or four-year public schools (17.4%) during the same period.^{Note Reference [4]}

In 2017, researchers at the Federal Reserve Bank of New York analyzed school and student characteristics that might lead to student loan default. They found that attending a for-profit college was the strongest predictor of student loan default — greater than college completion, major, college selectivity, or a student’s income level.^[5]

Borrowers who attend for-profit colleges are also more likely than other borrowers to miss a student loan payment.

Out of all student loan borrowers who attended private, for-profit colleges, 54% were delinquent on a student loan payment at least once in the 12 months after graduation, compared to about 40% of public and private nonprofit school attendees.^[6]

Student loan default rates tend to be lower for people with higher degrees and the highest for people who don’t complete a degree or certificate.

NCES reported 12-year federal student loan default rates for folks who entered repayment in 2003-2004. It found:^{Note Reference [4]}

People who don’t complete their degree or certificate are also far more likely to be late on a student loan payment within their first year of repayment.

In 2016-2017, 41.5% of people who did not complete their program had at least one student loan delinquency in their first year of repayment, compared to 25.4% of program graduates.^[7]

Students from wealthier families are more likely to avoid student loan default.

Forty-one percent of students from the lowest 25% of income-earners went into default at least once 12 years after entering repayment in 2003. That’s triple the rate of students from the top 25% of earners.^{Note Reference [4]}

Black and Latino/a students experience the highest barriers to student loan repayment compared to borrowers of other races. Black students face the highest levels of student loan debt by race.

According to NCES survey data of 14,7000 students, among Black bachelor’s degree-completers in 2007-2008, about 34% had defaulted on a student loan at least once in the 10 years after graduation. That’s more than double the student loan default rate of all bachelor’s degree-completers.^[8]

The Federal Reserve Bank of New York reports states’ student loan delinquency rates. The student loan delinquency rate refers to the percentage of student loan borrowers who are currently at least 90 days delinquent.^{Note Reference [2]}