Roughly a million borrowers defaulted on their federal student loans late last year, with millions delinquent on their payments and sliding toward the same fate. That’s according to federal data and the latest Household Debt and Credit Report from the Federal Reserve Bank of New York, which dropped on Tuesday. The report includes student loan data as of the end of 2025.
Student loan delinquencies have continued to worsen, said New York Fed researchers on a call with reporters, and they expect the number of borrowers in default to continue to grow.
The report offers further confirmation of a crisis in the U.S. student loan portfolio, in which too many borrowers are not repaying their student loans. Nearly 10% of student loan balances are more than 90 days past due, according to the report.
Remember when banks found out that mortgage backed securities were toxic because they gave loans to millions of people without applying basic home loan finance vetting, and they knew the CDO bubble was about to burst but they accelerated their purchasing of toxic assets anyways because they were still making money, and then the banks went bankrupt from holding billions in now worthless assets, and then got the government to bail out their corporations with billions of OUR tax payer dollars?
Part of lending is taking the calculated risk that you might not get paid back. The other side of “too big to fail” is that the rest of us are “too small to succeed.”