The United States is confronting its largest student loan default and delinquency crisis in history, according to a coalition of 62 lawmakers who have called for immediate action from the Department of Education. Led by Senators Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.), along with Representatives Ayanna Pressley (D-Mass.) and André Carson (D-Ind.), the group has sent a urgent letter to Education Secretary Linda McMahon, demanding responses by June 22, 2026.
The crisis comes as significant changes to the student loan system are set to take effect on July 1, including new repayment plans and the end of forbearance for borrowers in the SAVE plan. The lawmakers argue that current administration policies are exacerbating the situation, with financial repercussions extending beyond individual borrowers to affect credit markets, housing, and household budgets.
Record-high defaults and delinquencies
Current data reveals a stark picture of the student loan landscape. Nearly 9 million borrowers are now in default, a dramatic increase from about 5 million last summer. Of these, 3.6 million defaulted during the administration’s first year in 2026, equating to roughly one default every nine seconds. Additionally, one in four borrowers with payments due is delinquent, and 75% of those who slid from delinquency into default had never defaulted before.
The consequences of these defaults are severe. Around 2 million borrowers saw their credit scores fall by an average of 100 points in 2026. When collections fully resume, Moody’s Analytics estimates that more than $30 billion could be seized from paychecks, Social Security checks, and tax refunds by the end of 2027.
Five urgent demands from Congress
The coalition has outlined five critical steps they believe the Department of Education must take immediately to mitigate the crisis:
1. Cancel eligible debt
The lawmakers are calling for the cancellation of debt for borrowers who already qualify under existing programs, including income-driven repayment (IDR) forgiveness, Total and Permanent Disability discharge, closed school discharge, borrower defense, and Public Service Loan Forgiveness.
2. Rehire Federal Student Aid staff
The letter highlights that the Department of Education has cut 653 Federal Student Aid (FSA) employees, more than 40% of the office that manages loans and oversees servicers. The coalition is urging the rehiring of these essential staff members.
3. Clear the backlog of income-driven repayment applications
To alleviate the burden on borrowers, the coalition is demanding that the backlog of income-driven repayment applications be cleared promptly.
4. Enroll SAVE borrowers in the lowest-cost plan
For the 7.5 million borrowers in the SAVE plan, the coalition is asking that they be automatically enrolled in the lowest-cost plan available if they do not choose one themselves.
5. Pause forced collections and create default-prevention forbearance
Finally, the lawmakers are urging the Department of Education to maintain the pause on forced collections, end the agreement handing default collections to the Treasury Department, and create an interest-free default-prevention forbearance.
The broader context of student loan changes
This is the second time in eight months that a Democratic coalition has pressed the Department of Education on the impending default crisis. The pressure comes as the SAVE plan, which offered more affordable payments and a shorter timeline to debt relief, has been permanently blocked by court order, with its forbearance set to end this fall.
As borrowers leave the SAVE plan, they can move to the Income-Based Repayment (IBR) plan or the new Repayment Assistance Plan (RAP), which is set to launch on July 1. However, the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans are scheduled to disappear by mid-2028 under the One Big Beautiful Bill Act, narrowing the menu of affordable options for borrowers.
The lawmakers have asked Education Secretary Linda McMahon to respond in writing by June 22, 2026, outlining the steps the Department of Education plans to take to address this unprecedented crisis.
