Borrowers default for many reasons. They are financially insecure, their lives are complex, they struggle to navigate in systems not always designed with their needs in mind. Many also have been poorly served by the U.S. Department of Education and its contractors.
Even though defaulting on a student loan is a worst-case scenario for borrowers, there is much we do not know about outcomes for those who default, and even less is known about borrowers’ experiences in and perceptions of default.
This report from New America attempts to fill in some of these knowledge gaps by providing a narrative about why borrowers default, the barriers they face while in default, and how they attempt to bring their loans back into good standing. Current and historic failures in the default system continue to damage vulnerable families’ finances, and this analysis also underscores the need for additional relief for those who have been trapped in default.