Student Loan Defaults Surge to 2.6 Million in Q1 2026, New York Fed Reports The Federal Reserve Bank of New York reported that 2.6 million student loan borrowers defaulted in the first quarter of 2026, marking the first time since the COVID-19 pandemic that defaults have appeared on consumers’ credit reports. The data, released in a blog post, also noted that approximately 1 million borrowers defaulted during the fourth quarter of 2025. These defaults are concentrated among older borrowers, residents of Southern states, and individuals who were not behind on their federal student loans prior to the pandemic. The New York Fed highlighted that the surge in defaults is linked to the resumption of repayment obligations for borrowers who had previously benefited from pandemic-related relief measures. Over the past three years, more than 40 million federal student loan borrowers were exempt from making payments due to the pandemic. However, the U.S. Department of Education’s “on-ramp” period, which lasted from October 2023 to October 2024, prevented late payments from being reported to credit bureaus. It typically takes 270 days of missed payments for a loan to enter default status, which explains why defaults only recently appeared on credit reports. The report also noted that a second wave of defaults could emerge as millions of borrowers who enrolled in the now-defunct Biden-era Saving on a Valuable Education (SAVE) plan are forced to resume repayment. The SAVE plan, which allowed borrowers to pause payments since the summer of 2024, was terminated earlier this year by a federal appeals court. Borrowers who signed up for SAVE have been excused from making payments since the summer of 2024.#save_plan #federal_reserve_bank_of_new_york #us_department_of_education #new_york_fed #bidenera
