Student Loan Default Rates Rise for Sixth Year

The number of borrowers defaulting two years into repayment has increased six years in a row.

New data from the Department of Education show the number of borrowers defaulting on their student loans has continued to increase in the last three years.
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In his Aug. 22 speech announcing the plan, Obama proposed making all federal loan borrowers eligible for the Pay As You Earn program, which caps monthly loan payments at 10 percent of a borrower's income. Currently, students who first borrowed before 2008 or have not borrowed since 2011 are not eligible for the program.

In order to increase awareness, Obama suggested launching an enrollment campaign to reach out to struggling borrowers, an endeavor which Duncan told The New York Times the department will begin this month.

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Despite the fact that millions of borrowers are currently in default, fewer than 10 percent are enrolled in an income-based repayment plan, according to recent data from the Consumer Financial Protection Bureau.

"The more than 600,000 borrowers who defaulted on their loans in the last few years deserved to know all their options before it was too late," said Lauren Asher, president of TICAS, in a statement. Obama's proposal to expand outreach to certain borrowers, Asher said, "is sorely needed to keep more borrowers from falling through the cracks."

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