Your Default Risk Profile

For most Colorado borrowers, the student loan crisis crept up quietly. Payments were frozen during COVID, then slowly resumed, then a buffer period gave millions extra time. But that buffer expired in fall 2024 — and nine months later, in June 2025, the default clock started ticking again for the first time since the pandemic began.

The result: the number of borrowers in default jumped from 5.3 million to 9.5 million in a matter of months. That's not a gradual drift — it's a wave. And advocates warn that another one may already be building.

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 Baez, policy director for the advocacy group Protect Borrowers

That pressure isn't hitting everyone equally. The states with the highest default rates are concentrated in the South — Mississippi leads at 28.3%, followed by Louisiana, Alabama, West Virginia, and Oklahoma. The territory of Puerto Rico has the nation's highest rate at 30.9%. Of the 15 states with the highest default rates, 14 voted for President Trump in 2024.

Advocates say this complicates the popular narrative about who student loan borrowers actually are. These aren't just recent graduates at elite universities — they're working-class borrowers in Republican-leaning states who took on debt to improve their lives and are now getting squeezed from every direction.

Default Rates: Highest-Default States vs. National Average

How Well Do You Know the Student Loan Default Crisis?

Five questions. The answers may surprise you.

When did borrowers start defaulting again after the pandemic pause ended?

• Fall 2024, when the buffer period expired — Close — the buffer period did end in fall 2024, but loans couldn't technically enter default until nine months later. The first new defaults hit in June 2025.
• June 2025, nine months after the buffer ended — Correct. Default requires being nine months past due, so the first post-pandemic defaults arrived in June 2025 — and the numbers exploded almost immediately.
• October 2023, when payments restarted — Payments restarted in 2023, but loans couldn't enter default during the Biden administration's on-ramp buffer period that lasted through fall 2024.
• January 2025, with the new administration — The administration change happened then, but the default timeline is driven by the nine-month rule — not a policy date. Defaults began arriving in June 2025.

How does the nonpayment rate for for-profit college borrowers compare to public school borrowers?

• About the same — school type doesn't matter much — Actually, school type is one of the strongest predictors of default risk. The gap between for-profit and public school borrowers is significant.
• Slightly higher — around 5 to 10 percentage points more — The gap is much larger than that. For-profit borrowers are 90+ days behind at more than double the rate of public school borrowers.
• More than double the rate of public school borrowers — Correct. One-third of for-profit college borrowers are 90 or more days behind — a rate more than double that of public school attendees. And 76% of the highest-default schools are for-profit.
• Triple the rate — for-profits dominate default lists — Not quite triple, but more than double. The federal Office of Student Aid data shows 33% of for-profit borrowers are 90+ days behind versus the public school rate.

What happened to the SAVE repayment plan?

• It was expanded to cover more borrowers — The opposite happened. SAVE was the most generous income-driven repayment plan available — and the Trump administration eliminated it as part of its student loan overhaul.
• It was eliminated by the Trump administration — Correct. SAVE — Saving on a Valuable Education — was the most generous income-driven repayment plan. Its elimination means millions of enrolled borrowers now face higher monthly payments.
• It was renamed but otherwise unchanged — It wasn't renamed — it was ended. The Education Department described the broader overhaul as simplifying a 'fragmented and confusing' system, but borrowers who relied on SAVE will pay more.
• It was paused pending a court ruling — The plan was eliminated, not paused. Starting this month, new borrowers choose between only one standard plan and one income-driven option — far fewer choices than before.

Which U.S. territory has the highest student loan default rate in the country — higher than any state?

• Guam — Not Guam. The territory with the nation's highest default rate — 30.9%, above even Mississippi's 28.3% — is Puerto Rico.
• U.S. Virgin Islands — Not the Virgin Islands. Puerto Rico has a 30.9% default rate, the highest of any state or territory in the country.
• Puerto Rico — Correct. Puerto Rico's 30.9% default rate exceeds Mississippi's 28.3% — making it the highest of any U.S. state or territory in the AP's analysis.
• American Samoa — Not American Samoa. Puerto Rico tops the list at 30.9%, a rate that reflects the island's deeper economic pressures on top of the national student loan crisis.

What serious financial consequences can default trigger — even though they've been paused for now?

• Only a lower credit score — nothing beyond that — A credit score hit actually begins before default — within a few months of missed payments. Default itself opens the door to much harsher consequences.
• Garnished wages or seized Social Security payments — Correct. Default can lead to garnished wages or seized Social Security payments. The Trump administration has currently paused these involuntary collections — but that status can change.
• Immediate arrest or criminal charges — Student loan default is not a criminal matter. The consequences are financial: damaged credit, and potentially garnished wages or Social Security benefits.
• Automatic disqualification from all future federal aid — The article doesn't state this as a consequence. What it does confirm: default can lead to garnished wages or seized Social Security payments once involuntary collections resume.

For Colorado borrowers, these national numbers land in a specific economic context. The state's unemployment rate sits at 3.9% — slightly below the national rate of 4.2% — but a job doesn't automatically mean a student loan payment is affordable. The Consumer Price Index has continued climbing, and advocates say rising costs of housing, groceries, and transportation are squeezing borrowers even when they're employed.

The shrinking menu of repayment options makes the math harder. Where borrowers once had several income-driven plans to choose from, new enrollees now pick from just two. Those already enrolled in the eliminated SAVE plan face an abrupt jump in what they owe each month — at exactly the moment the cost of everything else is rising.

The Economic Squeeze — Colorado Context

• 3.9% — Colorado Unemployment
• 4.2% — National Unemployment
• $1.7T — Federal Loans Outstanding
• 20% — Borrowers Now in Default

How We Got Here: The Pandemic Default Timeline

• March 2020 — Pandemic pause begins
• 2023 — Payments technically resume
• Fall 2024 — Biden on-ramp buffer period ends
• 2024 — SAVE plan eliminated; repayment options cut
• June 2025 — First post-pandemic defaults hit — 5.3M borrowers
• Now — 9.5 million borrowers in default; involuntary collections paused

Common Myths About Who Defaults on Student Loans

Student loan defaulters are mostly recent graduates from elite schools.

Verdict: false

The states with the highest default rates are largely in the South — and 14 of the top 15 voted for Trump in 2024. Advocates describe the typical defaulter as a working-class borrower who cannot keep up with loan payments on top of rising living costs.

For-profit and public school borrowers default at roughly the same rate.

Verdict: false

For-profit school borrowers are 90 or more days behind at more than double the rate of public school borrowers. Three-quarters of the schools with the highest nonpayment rates are for-profit institutions.

Default only hurts your credit score.

Verdict: false

Credit damage begins with just a few months of missed payments — before default. Once a borrower enters default, the consequences can escalate to garnished wages or seized Social Security payments.

The pandemic pause gave borrowers enough time to get back on track.

Verdict: mixed

The pause did bring millions out of default and gave federal forgiveness programs time to work. But within months of protections ending, defaults nearly doubled — from 5.3 million to 9.5 million.

The For-Profit School Problem — What the Data Shows

Federal student aid data released this year found that 33% of for-profit college borrowers were 90 days or more behind on their payments. That rate is more than double what public school borrowers face.

Of all schools ranked in the top quarter for nonpayment rates, 76% were for-profit institutions. The Office of Federal Student Aid says a high nonpayment rate represents a 'serious risk' of developing into a full default rate.

Career Education Colleges and Universities — an association for private trade schools and career colleges — is so concerned it has formed a task force to reach out to students about loan repayment. The group's head, Jason Altmire, pointed to pandemic confusion and the failed Biden-era forgiveness effort as contributing factors. The issue is on the agenda at the association's upcoming summer convention.

If You're Behind on Student Loans: What to Do Now

1. Find out which repayment plan you're on — Log in to your loan servicer's portal. If you were on SAVE, you'll need to actively select a new plan — the switch doesn't happen automatically.
2. Understand the default threshold — Federal student loans enter default after nine months (270 days) of non-payment. Credit damage begins well before that — so acting early gives you more options.
3. Know what default can trigger — Once in default, the federal government can garnish wages or Social Security payments. Involuntary collections are currently paused, but that status can change without a fixed deadline.
4. Explore the remaining income-driven option — New borrowers now choose between one standard repayment plan and one income-driven option. Contact your loan servicer to see if the income-driven plan would lower your monthly payment.
5. Contact your loan servicer directly — Many options — including deferment and forbearance — require a phone call or written request. Servicers listed on your loan documents or at studentaid.gov are your first point of contact.

Know Your Options Before You Fall Behind

• Federal Student Aid Website: StudentAid.gov is the official portal for checking your loan status, finding your servicer, and comparing repayment plans.
• Check Your Repayment Plan Now: The SAVE plan has been eliminated. If you were enrolled, log into your servicer account to see what plan you've been moved to and whether you need to take action.
• Involuntary Collections Are Currently Paused: The Trump administration has held off on garnishing wages or Social Security payments — but there is no permanent protection. Staying informed is your best defense.

The student loan default crisis isn't an abstract policy failure — it's showing up in the lived experience of millions of borrowers who did what they were told to do: take out loans, get an education, build a better life. The fact that the steepest defaults are concentrated in working-class communities in states that overwhelmingly supported the current president makes the political arithmetic complicated.

For Denver-area borrowers, the message is urgent: the protections that kept defaults off the table for nearly five years are gone. The repayment options are narrower than they were a year ago. And the next wave of defaults may already be forming as former SAVE enrollees face their first higher bills. Knowing where you stand — and acting before nine months pass — is the difference between a manageable debt and a crisis that follows you for years.

Sources & References

• Primary source: Denver7 — AP via Scripps News Group
• Office of Federal Student Aid — Number of borrowers in default; total federal loan dollars in default; school-type nonpayment rate data
• U.S. Bureau of Labor Statistics — National unemployment rate, June 2026