The number of US federal student loan borrowers in default has surged to 9.5 million — one in five — with $233.3 billion now more than nine months overdue, according to an Associated Press analysis of Office of Federal Student Aid data. The jump of 4.2 million defaults between April 2025 and March 2026 follows the expiration of pandemic-era payment pauses and the Trump administration’s elimination of the most generous income-driven repayment plan, SAVE. Southern states bear the heaviest concentrations: Mississippi’s default rate stands at 28.3%, and Puerto Rico’s reaches 30.9%. For now, involuntary collections remain suspended, but a Moody’s Analytics report indicates wage garnishments are likely within the next year, which would further strain household budgets.

Household debt stress is not confined to the United States. In Brazil, a record 83.5 million adults — more than half the population — had overdue accounts in 2026, with total arrears exceeding R$570 billion, according to credit bureau Serasa. Credit card debt accounts for 27% of the total. Consumer advocates in São Paulo describe a pattern in which distressed borrowers are offered new credit to cover old payments, worsening the debt burden. One case involves a teacher who accumulated R$120,000 in medical and dental debt after cancer treatment and now pays R$1,882 monthly instalments while relying on online raffles to bridge the gap.

The strain extends to sovereign balance sheets. Brazil’s public debt is projected to surpass 100% of GDP between 2032 and 2035, a study by the Chamber of Deputies’ Budget Consultancy shows. Analysts in Brasília calculate that stabilising the debt would require a primary surplus of 2% of GDP — roughly R$250–300 billion annually — yet the entire discretionary budget is only R$250 billion, making cuts to mandatory spending unavoidable. Much of the debt is linked to the Selic rate, so when inflation rises and the central bank increases rates, government interest payments climb, further worsening the fiscal position. In Argentina, the government missed its first-half fiscal target agreed with the IMF by approximately 570 billion pesos, posting a deficit of 1.02 trillion pesos in June alone. The shortfall, attributed to delayed income tax filings and mid-year bonus payments, is expected to require a waiver when IMF Managing Director Kristalina Georgieva visits Buenos Aires in late July.

Colombia’s incoming administration, facing a fiscal deficit near 8% of GDP — the highest outside wartime — has announced a 60 trillion peso (11%) budget cut effective 8 August. The plan, viewed from Bogotá, will shrink public investment and trim temporary public-sector jobs, though severance costs may delay savings. Meanwhile, private wealth is stepping into social gaps: MacKenzie Scott, the billionaire philanthropist, donated $20 million to the youth mental health charity Active Minds, the largest single gift in its history, at a time when nearly one in five US adolescents report thoughts of self-harm. Scott’s own experience of poverty — once using denture glue to fix a broken tooth — informs a giving strategy that has distributed an average of $10 million daily over seven years.

The next test for sovereign credibility comes with Georgieva’s visit to Argentina, where the government must negotiate a path back to its programme targets.