Despite the amount of attention garnered by student loan defaults since the 1990s, few studies provide answers about why borrowers default and how best to help them. The lack of research helps perpetuate unproven theories about default, including the idea that the recession is solely to blame for increased default rates.
The stakes are high because vulnerable students attempting to better their lives face severe consequences if they default on federal student loans. The government has nearly boundless powers to collect student loans, far beyond those of most unsecured creditors. This report addresses questions about the causes of default and the effectiveness of programs intended to assist borrowers in default, including a summary of existing research, results from National Consumer Law Center’s (NCLC) survey of borrowers in default, and policy recommendations.