Student loan defaults surge in Wisconsin, US after federal reprieve ends

The number of Wisconsinites many months behind on student loan bills has risen by nearly 50% since last fall.

That’s according to federal data analyzed by the Associated Press, which found that more than 108,000 people in Wisconsin haven’t made payments on their loans in more than 360 days.

Across the country, the number of students in student loan default has surged by millions since a four-year pandemic reprieve ended in 2024, and advocates say it’s poised to worsen as President Donald Trump’s administration has ended existing relief options.

Borrowers are placed in default after missing payments for nine months. The status triggers a raft of devastating consequences. The entire balance becomes due at once, and the loan is sent to collections, crashing the borrower’s credit score. That can make it harder to borrow, rent or even find work.

Around 34,000 Wisconsinites entered student loan default since September 2025, the AP found. Of the roughly 709,100 people in Wisconsin who hold student loans, one in seven is currently in default.

Here’s how we got here: As a pandemic relief measure, the federal government allowed borrowers to suspend student loan payments until 2023, and President Joe Biden’s administration then provided a one-year grace period. That ended in fall 2024, allowing loans to enter into default after nine months of missed payments.

A surge in defaults followed, and today around 9.5 million borrowers nationwide — over 1 in 5 — are in default, including those whose loans were well past due before the pandemic, according to the AP analysis. The previous record for borrowers in default had been 8 million in December 2019.

Meanwhile, many borrowers are facing much higher monthly payments since the Trump administration ended the SAVE repayment plan, which offered more flexibility and lower payments than any other. In its absence, borrowers will see longer repayment terms and “unpredictable payment spikes,” wrote Michele Zampini, associate vice president of federal policy and advocacy at the Institute for College Access and Success, in a February blog post.

“I am seeing despair and outrage and despondency and just a very wide mix of pretty extreme emotions, the likes of which I have not seen before,” Alan Collinge, the founder of grassroots advocacy group Student Loan Justice, told the AP.

The federal government can garnish wages and Social Security payments from borrowers in default, but the Trump administration in January walked back plans to begin collections on their loans. A Moody’s Analytics report this spring said garnishments are likely to begin within the next year, warning of “an additional headwind in an increasingly fragile economy.”

Governments and colleges may also impose additional penalties on borrowers in default, including restricting access to further financial aid, withholding transcripts and suspending professional licenses and driver’s licenses.

“These measures are not only punitive, they’re also self-defeating: by undermining someone’s ability to cover basic expenses, return to school to finish a degree, keep their job, or even drive a car, the default system makes it harder for someone who is already struggling to secure their financial footing,” Zampini wrote in 2025.

For-profit colleges, lower repayment rates

Students who attend Wisconsin’s for-profit colleges are far less likely to satisfy their loan payments than their peers at the state’s public and nonprofit private colleges, the AP data shows.

AP reporters analyzed data from the Office of Federal Student Aid on students whose loan payments first came due between January 2020 and May 2025, typically because they either graduated or left school. The analysis does not include students at schools with fewer than 100 borrowers.

The data shows students who have attended for-profit schools in Wisconsin are twice as likely as their peers to be at least 90 days behind on payments. At Wisconsin’s public and private colleges, one in seven of these borrowers had fallen behind on payments by May of this year. At for-profit schools, the rate was more than one in four.

Nonpayment rates were highest for students who attended for-profit cosmetology schools.

Nearly half of the 300 borrowers in the sample who attended Tricoci University of Beauty Culture’s Janesville campus were at least 90 days late.

The Paul Mitchell beauty schools in Madison — which has since closed — and Milwaukee have 40% nonpayment rates. The nonpayment rate for the Salon Professional Academy in Kenosha is 36%, and the rate at State College of Beauty Culture is 35%.

Elinor Mittlestat, owner of State College of Beauty Culture, found the nonpayment rate surprising. She noted that many people graduate from the school without any loans.

“It has been a strained economy, and I do understand that newly graduated students sometimes struggle to make student loan payments,” she said.

One reason for the low repayment rate could be that cosmetology graduates tend to have relatively low incomes. On average, graduates of the Paul Mitchell school in Milwaukee, the Salon Professional Academy in Kenosha and State College of Beauty Culture make $7,000 to $12,500 less than the median Wisconsin high school graduate, according to an analysis of earnings data from Open Campus and The HEA Group.

Meanwhile, student borrowers who don’t finish school have to make loan payments too, even though they don’t have a credential to help them get a better job. Those who don’t graduate are more than twice as likely to end up in default, according to research by the Pew Charitable Trusts.

“The most important thing that you can do to be able to repay any loans you take out is to finish your program,” Carole Trone, executive director of the Wisconsin Coalition on Student Debt, told Wisconsin Watch in January. People leave school for all sorts of reasons, including family commitments and job changes. “A lot of that can be really unavoidable … but those are the borrowers that often have the most difficulty in repaying their loans.”

Around 25,000 students who recently attended Wisconsin public colleges are at least 90 days behind on their payments too, though they represent a far smaller share (13%) of those borrowers.

Students who attended Gateway Technical College have the highest nonpayment rate of the state’s public schools, with three in 10 recent students not making payments.

Gateway communications manager Lee Colony said the college needs to use a “personal touch” to see what’s driving people to not pay their loans.

“We will reach out to those students and see if there is any help we can provide to them for repayment options,” Colony said. “Some of that outreach will also include ways to educate them on finances and how to properly borrow money to pay for college.”

By comparison, the University of Wisconsin campuses in Oshkosh, Stevens Point, Superior and Whitewater all have nonpayment rates of 10%, while UW-Madison’s rate is just 3%. At all of those schools, most students receive some form of financial aid besides loans.

Nationwide, AP’s analysis found 133 schools where more than half of recent students are at least 90 days behind on payments. Nearly all of them are for-profit schools, and more than half of them are barber or beauty schools.

This story was reported in collaboration with The Associated Press through its Localize It initiative, which provides datasets, reporting and story ideas for local newsrooms.

Miranda Dunlap reports on pathways to success in northeast Wisconsin, working in partnership with Open Campus. Find her on Instagram and Twitter, or send her an email at mdunlap@wisconsinwatch.org.

Natalie Yahr reports on pathways to success statewide for Wisconsin Watch, working in partnership with Open Campus. Email her at nyahr@wisconsinwatch.org. 

This article first appeared on Wisconsin Watch and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.