More than 5 million federal student loan borrowers have been in default for more than six years, Treasury and the Education Department said on September 30, 2026, announcing a new Defaulted Loans Support Center that lets those borrowers apply online to rehabilitate or consolidate the debt. The same announcement counts a second group of the same size: an additional 5 million borrowers who went into default in less than a year. The route runs through the Education Department’s StudentAid.gov site.
The figures are the two agencies’ own, published in Treasury press release sb0639. They describe numbers of borrowers, not dollars owed in default, and the release does not break the totals down by age, loan type or state.
Treasury counts two groups of 5 million borrowers in default
The central number comes from the Treasury release dated September 30, 2026, which states that “more than 5 million borrowers have languished in default for more than six years and an additional 5 million borrowers went into default in less than a year.” The two figures are separate groups. The first is long-standing default of more than six years. The second is recent default, under one year. Together they describe roughly 10 million borrowers, though the release does not add them up or say how many people sit between those two ends.
The release places the figures against a federal student loan portfolio of $1.7 trillion. That $1.7 trillion is the size of the entire portfolio, not the amount in default, and the release does not give a defaulted balance. Treasury Secretary Scott Bessent described the aim in those terms, saying that Treasury and the Education Department “are restoring fiscal responsibility to our nation’s $1.7 trillion federal student loan portfolio.”
The Defaulted Loans Support Center puts rehabilitation and consolidation online
The center is the product of the Federal Student Assistance Partnership between the two departments. According to the release, a borrower can apply online for loan rehabilitation or consolidation at the Education Department’s default support page on StudentAid.gov, understand the consequences of default, compare repayment options, upload documents, review estimated payments, sign agreements electronically, make payments and track progress.
Rehabilitation and consolidation are the two ways the release names for resolving a federal student loan default. The release does not walk through the rules of either one, and it does not give payment amounts, the number of qualifying payments or the documents required. It lists no application fee. The release names the Education Department’s own StudentAid.gov site as the place to apply.
Secretary of Education Linda McMahon called the announcement a “historic step toward breaking up the federal education bureaucracy,” a statement about the department’s broader direction rather than about borrower terms.
A temporary 1 percent rate cut is tied to autopay
The one monetary term in the announcement is an interest incentive. Borrowers who consolidate out of default and enroll in automatic payments can receive what the release calls a “temporary 1% interest rate reduction.” The release does not say how long the reduction lasts, what rate it is applied to, or whether it ends if autopay is dropped. Those details are not stated in the announcement, and none are supplied here.
The incentive is limited to one of the two routes. The release attaches the reduction to consolidation out of default combined with autopay, not to rehabilitation.
What the release’s results measure
The agencies report that approved rehabilitation applications rose 69 percent in fewer than six months since the partnership began, and that consolidations out of default rose 95 percent after a technical issue the release attributes to the previous administration was corrected. Both are percentage increases; the release gives no underlying counts, so the number of borrowers behind either figure is not public in this announcement.
The release also reports user feedback: 89 percent said the application was easy, 86 percent understood the next steps, and 84 percent found the timing reasonable. It does not state how many users were surveyed or when. These are the agencies’ satisfaction measures and not an independent review.
What the release leaves out about collections
A borrower in default can face collection actions, but the announcement does not describe them. It says nothing about wage garnishment, the Treasury offset of tax refunds or federal benefits, or the percentages involved, and the StudentAid.gov default page could not be read in full for this report because it loads its content with scripts. No garnishment or offset figure is cited here for that reason.
What the record supports is narrower and firmer: the two departments say more than 5 million borrowers have been in default for more than six years, say an additional 5 million defaulted within the last year, and say the way to apply for rehabilitation or consolidation is now an online application on the Education Department’s own site. The sourcing for each figure is the Treasury press release archive entry for September 30, 2026, press release sb0639.
Keeping collection paperwork in one place
The Treasury announcement is about federal student loans in default, and the kit described here does not cover student loan rehabilitation or consolidation. It is built for households that are dealing with debt collectors or a frozen bank account and want the protections and the paper trail organized.
The Bank Account & Debt Protection Kit includes the 2-month bank protection rule, the debt-validation steps and a protected-funds and dispute log, which give collection notices and account records one fixed place.
Open The Bank Account & Debt Protection Kit for collection and dispute records →
This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
