A Record Number of Borrowers Are Falling Behind
One in five federal borrowers is now in default. Most don’t know that discharge through bankruptcy is more available than ever — and we’ve already helped clients erase hundreds of thousands of dollars in this debt.
According to a recent Associated Press report published by CBS News MoneyWatch on July 20, 2026, student loan defaults have surged to record highs in the wake of the COVID-era payment pause’s expiration. Roughly 9.5 million people — one in five federal student loan borrowers — are now in default, meaning they are more than nine months behind on their payments.
That number has nearly doubled since June 2025, when 5.3 million borrowers were in default. Nationwide, $233.3 billion of the $1.7 trillion in outstanding federal student loan debt is now in default, and the pressure shows no sign of easing: the federal government has eliminated the SAVE income-driven repayment plan, the most generous option available to borrowers, leaving many facing higher monthly bills than they had planned for.
“Folks are struggling to make ends meet and cover all the rising costs of everything else. The growing student loan bills are making things worse and folks are falling behind.” — Aissa Canchola Bañez, policy director, Protect Borrowers, as quoted by the Associated Press
What Default Can Mean for Your Paycheck — and Your Social Security
A few months behind on student loan payments can hurt your credit score. Full default is more serious, and it opens the door to wage garnishment and the garnishment of Social Security benefits. For now, the current administration has held off on resuming these involuntary collections — but that pause is not guaranteed to last, and no borrower should assume it will.
The Option Most Borrowers Have Never Been Told About
What rarely makes it into the news coverage of record default numbers is that federal student loan debt is not always the permanent, unbreakable obligation it’s made out to be. Under 11 U.S.C. § 523(a)(8), student loans can be discharged in bankruptcy when a borrower demonstrates “undue hardship” — and a landmark 2022 Department of Justice guidance has made that standard meaningfully easier to meet than it was for the four decades before it.
Student loan discharge requires careful legal analysis of your specific circumstances. The following factors may support a discharge:
- You have a chronic illness, disability, or mental health condition that affects your ability to work
- You care for a dependent with significant health needs
- Your loan balance has grown far beyond the original amount borrowed due to interest and fees
- You did not complete your degree or program of study
- You have been on income-driven repayment, deferment, or forbearance for years without making meaningful progress
- You are near or at retirement age with no realistic ability to repay the debt
- Your income is unlikely to increase enough to service the debt over any reasonable timeframe
Real Results We’ve Achieved for Clients
This is not theoretical for us. At J. Doling Law, we have successfully discharged hundreds of thousands of dollars in federal student loan debt for our clients — debt that, before they came to us, felt permanent. Here is a sample of outcomes we’ve obtained:
Case A — Full Discharge: $254,000 → $0
Debtor, age 54. Borrowed $40,000 in the 1990s. Balance had ballooned to $254,000. Full discharge granted.
Case B — Full Discharge: $89,000 → $0
Debtor, age 72. Late-in-life divorce. Returned to nursing school. Needed to retire but carried $89,000 in loans. Full discharge granted.
Case C — Partial Discharge: $159,000 → $26,000
Debtor, age 45. Chronic autoimmune disease. Earns approximately $60,000/year with frequent work interruptions due to flare-ups. Partial discharge granted.
A Note on Jenny L. Doling’s Work in This Area
Teaching the Profession — From the Inside
Jenny L. Doling is one of the only bankruptcy attorneys in California actively handling student loan discharge adversary proceedings. Her expertise in this area is recognized at the highest levels of the legal practice: she was recently invited to co-present a legal education webinar on student loan discharge alongside the Honorable Magdalena Reyes Bordeaux, United States Bankruptcy Judge for the Central District of California, and Elan Levy, an attorney from the United States Attorney’s Office representing the Department of Education.
The webinar drew overwhelming attendance from California bankruptcy attorneys and others from around the country. Ms. Doling’s hope is that more consumer bankruptcy attorneys will begin representing student loan borrowers — so that the relief now available under the law actually reaches the people who need it.
If You’re Behind, You Have More Options Than You Think
If you are one of the millions of borrowers now in default — or worried that you’re heading there — you do not have to wait for a garnishment notice before you act. The record-high numbers in the news are not what determines your options; the specific facts of your situation are. We would be glad to talk through yours.
Frequently Asked Questions
What happens if my federal student loans go into default?
Default begins after roughly nine months of missed payments. It can damage your credit significantly and, when involuntary collections resume, can lead to wage garnishment or the garnishment of Social Security benefits. Default does not, however, mean your options have run out.
Can defaulted student loans still be discharged in bankruptcy?
Yes. Whether your loans are current, delinquent, or already in default, they can potentially be discharged in bankruptcy if you can show “undue hardship” under the Brunner Test. Default status does not disqualify you from pursuing discharge.
Will my wages or Social Security be garnished because of my defaulted student loans?
The current administration has held off on resuming involuntary collections such as wage and Social Security garnishment for defaulted federal loans, but that protection is not guaranteed to continue indefinitely. Borrowers should not wait for a garnishment notice to explore their options.
How did the end of the SAVE repayment plan affect borrowers?
The SAVE plan was the most generous income-driven repayment option available to federal borrowers. With it eliminated, many borrowers now face higher required monthly payments, which is expected to push even more borrowers toward delinquency and default.
What is a student loan adversary proceeding?
A student loan adversary proceeding (SLAP) is a lawsuit filed within a bankruptcy case seeking to discharge student loan debt. It is filed against the Department of Education and any private loan holders. Call (844) 894-4440 to discuss whether this option may be available to you.