MONTGOMERY, Ala. — Student loan defaults are climbing again in Alabama, putting the state among the hardest-hit in the nation as federal repayment and collection efforts resume after years of pandemic-era relief.
A New York Fed analysis released in May found that states in the South have the largest share of newly defaulted borrowers, with at least 10% of borrowers defaulting in Alabama, Louisiana, Mississippi, Georgia and South Carolina. An AP analysis published in July likewise found that Alabama ranks near the top nationally for default rates, alongside several other Southern states.
The national picture is also worsening. The New York Fed estimated that roughly 1 million federal student loan borrowers defaulted in the last three months of 2025 and another 2.6 million defaulted in the first three months of 2026. The report said the average borrower entering default is nearly 40 years old and was not past due on loans before the pandemic pause ended.
High college costs remain a major part of the problem. The College Board said the average published tuition and fees at public four-year colleges reached $11,950 in 2025-26, while private nonprofit four-year colleges charged an average of $45,000. In 1994-95, average tuition and fees at public four-year institutions were $5,740, after adjusting for inflation.
In Alabama, the long-term rise is clear at flagship public universities. Auburn University’s annual undergraduate resident tuition and fees rose from $1,476 in 1989-90 to $13,572 in 2026-27, according to university records. The University of Alabama’s published tuition and fees also have climbed sharply over time, reflecting the broader increase in the cost of attendance.
Alabama borrowers are carrying heavy debt loads as well. One 2025 state-by-state analysis put the state’s average federal student loan debt at $37,819, with about 658,400 residents carrying student debt.
The return of collections has exposed borrowers across the country, but the burden is falling hardest in the South. The New York Fed said no state was immune from the new wave of defaults, though the lowest-concentration states still had at least 4% of borrowers newly defaulting.
The issue is likely to remain a major pressure point for households, colleges and policymakers as more borrowers move from pandemic-era forbearance back into repayment.