More than nine million Americans have stopped paying their federal student loans. Together, they owe about $234 billion. That is the size of the student loan default problem now sitting on the Treasury Department’s desk. And according to a new report, the plan to deal with it may wait until the midterm elections are over.
That timing tells you a lot. A loan is a promise. When Washington won’t enforce it, the bill doesn’t vanish. Instead, it moves to taxpayers who never signed for it, including people who paid off their own loans or skipped college to go to work.
Key Takeaways
- More than nine million borrowers are in default on federal student loans, owing about $234 billion, Forbes reports from Education Department data.
- About 400,000 more borrowers defaulted in the quarter that ended June 30, 2026.
- Treasury plans to hire private debt collectors, possibly as soon as November, the Washington Sun reports. But sources say an announcement is unlikely before the midterms.
- A budget expert estimates that last year’s push to postpone collections has cost taxpayers about $5 billion so far.
- Borrowers can still get out of default through rehabilitation, which takes nine on-time payments within ten months.
How Big the Student Loan Default Problem Has Become
The numbers come from Federal Student Aid, the Education Department office that runs the loan program. As of June 2026, defaulted loans made up about 14 percent of the $1.64 trillion federal portfolio, Forbes reported. In the same quarter, another 400,000 borrowers slid into default.
Worse, the student loan default pipeline is still full. Nearly 20 percent of borrowers in active repayment were more than 30 days behind, according to the same data. That is roughly 3.5 million people who could be next. So this is not a problem that fixes itself if Washington simply waits.
What Treasury Is Planning for Student Loan Default
On Oct. 19, the Washington Sun reported that Trump administration officials are preparing penalties for borrowers in default, citing five sources. Three of them said Treasury is moving ahead with private debt collectors, possibly as soon as November. However, the sources also said those plans are unlikely to be announced before the midterms.
The tools themselves are not new. As Forbes explains, the government can garnish up to 15 percent of a defaulted borrower’s wages without a court order. It can also take federal tax refunds. In addition, it can offset up to 15 percent of Social Security benefits, as long as the remaining monthly benefit stays above $750.
Some officials want those offsets in place for the tax year that ends with the April 15, 2027, filing deadline. Still, the Sun reports the timeline could slip again while Treasury makes sure its new Defaulted Loans Support Center works. That online portal launched in September to help borrowers see what they owe and get current, Moneywise reports.
Waiting on Student Loan Default Has a Price
Here is the part that should bother every fiscal conservative. Last year, Treasury officials pushed to postpone collections. Marc Goldwein of the Committee for a Responsible Federal Budget, a nonpartisan budget group, told the Sun that the delay has cost taxpayers about $5 billion so far. He added that the cost grows the longer the administration waits.
Goldwein also put it bluntly. “They’ve done the same thing they criticized Biden for — we shouldn’t be canceling student debt for people who just don’t want to pay,” he said.
He’s right. Conservatives spent years fighting blanket loan forgiveness, and for good reason. After all, forgiveness by delay is still forgiveness. It just skips the vote. And just as before, the people picking up the tab include plumbers, farmers, and young families who never borrowed a dime for college.
Politics Is Not a Repayment Plan
One source told the Sun that acting before the midterms would be political folly. That may be smart politics. But it is not a principle. If collecting a lawful debt is the right policy in January, then it is the right policy in October. Voters deserve to hear the plan before they cast a ballot, not after.
To be fair, Treasury’s caution has a real basis. According to the Sun, staff warned that many of these borrowers are working people who are struggling to hold on to their jobs. That is a reason to collect carefully. It is not a reason to stop collecting.
A Conservative Fix for Student Loan Default
Enforcing the rules on student loan default doesn’t mean being cruel. Preston Cooper, a student debt expert at the American Enterprise Institute, told the Sun that borrowers should get a chance to do the right thing, without excessive fees, on an affordable plan. “Somewhere between treating them all as deadbeats and forgiving all the loans is probably the right solution,” he said.
That is a sound middle path. First, warn borrowers early and clearly, through the Education Department and through their colleges. Second, steer people into rehabilitation. It takes nine voluntary, on-time payments within ten months, and it removes the default from a credit history, Moneywise notes. Third, collect from those who still refuse to engage.
Finally, fix the root cause. Washington lends billions with little regard for whether a degree will pay off, while colleges get paid up front and carry none of the risk. That is why we backed Workforce Pell Grants for trades that lead to real jobs. Schools that load students with debt they can’t repay should share the loss. Meanwhile, every unpaid dollar adds to a federal debt whose interest costs now top defense spending.
What Borrowers Should Do Now
If you are behind, don’t wait for a letter. Log in at StudentAid.gov, check the status of every federal loan, and ask about rehabilitation or an income-based plan. Also, open every notice, because each one carries a deadline to request a hearing or review.
Frequently Asked Questions
How many borrowers are in student loan default?
More than nine million, owing about $234 billion as of June 2026, according to Education Department data reported by Forbes.
Can the government garnish wages after a default?
Yes. It can withhold up to 15 percent of disposable pay without a court order. It can also take federal tax refunds and offset part of Social Security benefits.
When will Treasury start collecting?
No date has been announced. The Washington Sun reports that private collectors could be hired as soon as November, while wage and benefit offsets may wait until 2027.
So here is the question: should Washington start collecting now, or keep waiting until after the election?
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