As defaults on student loans surge, millions are trying to get their lives back on track

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 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.

Across the country, the number of borrowers with defaulted student loans jumped by more than 4.2 million from April 2025 to March 2026, according to an Associated Press analysis. The surge includes many who went off track in 2024, when loan payments started coming due again after a pandemic-era freeze.

Hundreds of thousands more are months behind on payments, and another surge in defaults could be on the way. Millions of borrowers are facing higher monthly payments as the government dismantles its most affordable income-driven repayment option, the Saving on a Valuable Education Plan, one of several changes the Education Department says are intended to simplify a fragmented system.

Borrowers enter default after missing payments for nine months, and the consequences can upend lives. It hurts credit ratings and can lead to the debt being sent to collections.

“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,” said Alan Collinge, the founder of Student Loan Justice and the author of “The Student Loan Scam.”

The federal government can garnishee wages and Social Security payments from borrowers in default, but the Trump administration in January walked back plans to begin collections on their loans. A Moody’s Analytics report this spring said garnishments are likely to begin within the next year, warning of “an additional headwind in an increasingly fragile economy.”

Taking out student loans was too easy

Dreahn enrolled at Texas Woman’s University in 2004 as the first in her family to go to college. She cobbled together jobs, babysitting and working at a call center and an automotive shop. But she still needed to borrow heavily.

“There was one point where they were like, ‘If you don’t come up with the money, we’re dropping you from your classes,’” said Dreahn, who earned a degree in history with an emphasis on education and social studies. “And it was, ‘OK, what do I need to sign?’”

She said no one explained what taking out loans truly meant.

“You just kind of trust these advisors and trust these financial aid people that this is what you’re supposed to do,” Dreahn said.

While teaching, she took out more student loans to earn a pair of associate degrees from a public community college in Texas. She received a job offer at a chemical refinery, but it was rescinded because she was over the weight limit for the company’s safety equipment.

She filed for bankruptcy protection in 2022 in hopes that it would “erase everything.” She checked her online credit report afterward. For each student loan, the report read: “Nice! You’ve paid off 100% of this loan.” The message is sometimes shared with borrowers when student loans are consolidated or transferred to new companies even when the person still owes money.

Student loans are rarely discharged in bankruptcy. Borrowers must prove the loans pose an “undue hardship.” The process is cumbersome, and few qualify, advocates say.

But Dreahn didn’t know any of that.

“I was so relieved, like, ‘OK, now I can start life over,’” she said. “‘I can save some money.’”

She started working last year as a supervisor at a prison in Huntsville, Texas, about 70 miles north of Houston, and was living in an RV park to save money when she received the default notice.

“I just feel like, where is that light at the end of the tunnel now that I thought I had?” Dreahn said.

Some borrowers are so overwhelmed by their debt and changes to the federal student loan system that they’ve stopped paying.

Barbara Howaniec, a 63-year-old psychiatric nurse practitioner from Auburn, Maine, already has defaulted. She borrowed about $62,000 for her master’s degree from New York University, graduating in 2001. But after two decades of payments, she still owes about $67,000 with interest. She had put her loans in deferment for short stints while her children were young, unaware that interest would continue to accumulate.

Howaniec had hoped to have her loan forgiven after 25 years under an income-based repayment plan. But then came a letter saying the repayment schedule had changed and she owed 355 more payments. By the time she finished paying, she would be 91.

She made call after call, but she said the advice varied by whoever picked up the phone. Last year, as she paid for her own children’s college, she quit paying her own loans.

“I had already paid what I had borrowed. I’m like, no, I’m not going to pay anymore,” Howaniec said.

Some hunt pathways out of default

Dreahn had never been entirely clear how much she was borrowing when she was a student. As an adult, the process remained opaque. She had multiple loans transferred to different loan servicers. And then her loans were deferred when she went back to school.

“It’s a huge, huge mess,” Dreahn said. “It’s almost like it just gets sold off and you’re just lost in the system somewhere until you figure out that, ‘Oh, they want $700 this month. What?’”

Now in default, she hopes she might one day qualify for public service loan forgiveness. It requires borrowers to make 10 years of payments while working at a nonprofit or for the government.

“I’m trying to figure out: One, how I’m going to make it work. And two, what do I give up?” Dreahn said. “How do I manage buying groceries as well as making sure the bills are covered and this payment never gets missed?”

Hollingsworth and Forster write for the Associated Press. AP writer Adriana Morga contributed to this report.