Defaults on student loans surge following end of pandemic-era freeze
Student loan defaults have surged by over 4.2 million in the U.S. following the end of pandemic-era payment freezes. Many borrowers are struggling with complex repayment plans and financial instability, leading to increased debt burdens.
Why it matters
The rise in defaults reflects broader economic strain on the American middle class and highlights the challenges of the current student loan repayment system.
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Life after college did not go as Ashley Dreahn planned.
After starting out as a teacher, she went back to school — and took out more loans — in hopes of landing a higher-paying job in the chemical processing industry. It never materialized, and then came Hurricane Harvey, a job loss and a car breakdown. By 2022, she was so broke she filed for bankruptcy.
She found work at a Texas prison and was rebuilding her life, saving up for weight-loss surgery, when this spring she heard from a credit-monitoring service. The student loans she thought had been discharged in bankruptcy had ballooned to $94,298 with interest, and she had to start making payments. She was in default.
“I absolutely broke down,” said Dreahn, 40.
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