More than 3,000 people a day defaulted on their federal student loans in 2016, new government data show, underscoring persistent problems in the way the government and families finance higher education in the U.S.
The number of Americans who fell at least nine months behind on a payment on federal student loans increased by 1.1 million in 2016, according to Education Department data released this week. As of Dec. 31, roughly 8 million people owing $137 billion were in default.
The number of students who are unable to pay back their college loans is skyrocketing.
According to the U.S. Department of Education, at least half of the students at 1,000 colleges and trade schools have defaulted or failed to pay down even $1 of their principal loan within seven years.
Suzanne Martindale of Consumers Union said, “It wasn’t surprising because we hear all too often from students and families that they are struggling.”
Even so, the numbers are unprecedented.
By Matt Scully - Bloomburg
Social Finance Inc.’s online borrowers are defaulting at higher rates than underwriters for one of its bond deals had expected, the latest sign that an industry that hoped to upend banking is now getting tripped up by bad loans.
Losses on the company’s personal loans were high enough to breach key levels known as “triggers” last month on a bond deal issued in 2015 and backed by the loans, according to analysts at Morgan Stanley. If defaults keep rising, investors in bonds could end up missing out on expected interest payments.