Ashley Dreahn learned this spring that her student loans had ballooned to $94,298 with interest, then she was told she had to start making payments again. She had filed for bankruptcy in 2022 and believed the debt had been wiped away, but it later reappeared. The same month, defaulted student loans jumped by more than 4.2 million from April 2025 to March 2026.
April 2025 to March 2026
The jump in defaults covers borrowers who had already gone off track in 2024, after loan payments started coming due again following a pandemic-era freeze. Borrowers enter default after missing payments for nine months. Once that happens, credit ratings can take a hit and the debt can be sent to collections.
For borrowers in default, the federal government can garnish wages and Social Security payments. A Moody’s Analytics report this spring said garnishments are likely to begin within the next year. The Trump administration in January walked back plans to begin collections on defaulted student loans.
Ashley Dreahn
Dreahn enrolled at Texas Woman’s University in 2004 as the first in her family to go to college. She later went back to school and took out more loans in hopes of landing a higher-paying job in the chemical processing industry, but a job offer at a chemical refinery was rescinded because she was over the weight limit for the company’s safety equipment. She earned a degree in history with an emphasis on education and social studies, along with a pair of associate degrees from a public community college in Texas.
She said no one explained what taking out loans truly meant. After she was told, “If you don’t come up with the money, we’re dropping you from your classes,” she recalled responding, “OK, what do I need to sign?” Later, when she learned what had happened to her debt this spring, she said, “I absolutely broke down.”
SAVE plan
Millions of borrowers are also facing higher monthly payments as the government dismantles its most affordable income-driven repayment option, the SAVE plan. That change is part of the pressure feeding the default surge, since borrowers who cannot keep up with new bills can move closer to default after nine months of missed payments.
Dreahn said bankruptcy was supposed to “erase everything,” but that is not how her loans played out. Alan Collinge of Student Loan Justice said borrower reactions have been severe, saying, “I am seeing despair and outrage and despondency and just a very wide mix of pretty extreme emotions, the likes of which I have not seen before.” For borrowers already behind, the immediate question is whether collections resume and how quickly the government moves from missed payments to garnishment.
