Racial inequities in higher education and the labor market have led to unequal outcomes in student loan borrowing and repayment, with Black borrowers holding more student debt and being more likely to default on it compared with white borrowers. And student loan default, which disproportionately hinders Black borrowers’ access to credit, disparately affects different borrowers. Understanding the characteristics and circumstances of these different types of defaulters is critical for supporting borrowers most at risk of default and helping them recover when they enter default.

I use 2010–21 data from one of the three major credit bureaus to describe student loan default patterns, the associations between these patterns and other financial circumstances, and context for how circumstances differ by race. Focusing on borrowers who default multiple times, the data show that these borrowers are substantially more likely to hold utility and medical collections debt than other defaulters, have lower credit scores on average, and struggle to recover financially after entering default. Borrowers living in predominantly Black neighborhoods are more likely to default multiple times and hold utility collections debt at substantially higher rates. Further, the data show that medical and utility collections debt are stronger predictors of a borrower’s default pattern in predominantly white neighborhoods than in predominantly Black neighborhoods.

These findings provide evidence of the long-lasting financial hardships long-term and persistent defaulters experience, and borrowers in predominantly Black neighborhoods are more likely to experience these types of defaults. Policymakers could consider forgiving student loans for these borrowers to support marginal financial improvement. The findings also suggest that credit reporting practices and loan rehabilitation eligibility requirements may exacerbate financial struggles for borrowers who cannot stay current on their loans after curing a default, and these practices may be more likely to harm Black borrowers. Lastly, findings indicate that many borrowers have cured their defaults during the student loan payment pause, and after payments resume, these borrowers may be particularly vulnerable to the financial harm caused by new delinquencies and defaults.