A Federal Appeals Court Rules on the SAVE Plan Impacting Millions of Student Loan Borrowers

TheStreet

Betsy Mayotte, The Institute of Student Loan Advisors

Yeah, unfortunately, what I had been predicting since the COVID pauses has come to fruition, which is we are at historic delinquency and default rates for federal student loan borrowers. In the last quarter of 2025 alone, an additional 3.4 million people hit 270 days past due or more, which is when people default. And unfortunately, I do not see that number going down in the near future.

And as you know, defaults can lead to, first of all, it tanks your credit, but it also leads to wage garnishment, tax refund offset, social security offset. So it’s really a troubling development.

So this was sort of a perfect storm. I think one of the biggest reasons was actually the COVID pause. And while that was the right thing to do, what we did is we took 40 million people who are in the habit of making payments on their student loans out of that habit for over three years.

So there’s that. And then in the meantime, there was talk of forgiveness. And then that forgiveness was canceled by the courts.

And there was changes to repayment plans. And as you mentioned, the economy has changed quite a bit. Housing, health care, groceries, all of those are a lot more expensive.