One Million Americans Default On Their Student Loans Each Year, Report Reveals

More than one million American student loan borrowers default on their debt each year, a new report says.

That means by 2023, approximately 40 percent of borrowers are expected to default.

That is according to a new report by the Urban Institute, a nonprofit research organization dedicated to developing evidence-based insights on critical socioeconomic issues. Researchers found about 250,000 student loan borrowers see their debts go into default every quarter, and an additional 20,000 to 30,000 borrowers default on their rehabilitated student loans.

“My results indicate that the likelihood of student loan default is positively correlated with holding other collections debt (e.g., medical, utilities, retail, or bank debt). About 59 percent of borrowers who defaulted on their student loans within four years had collections debt in the year before entering student loan repayment (compared with 24 percent among non-defaulters). Those who will default on their student loans are more likely to reside in neighborhoods that have more residents of color and fewer adults with a bachelor’s degree or higher, but a borrower’s personal credit profile is a stronger predictor of default than the neighborhood where she resides,” said Kristin Blagg, a research associate in the Education Policy Program at the Urban Institute.

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