Borrowers in long-term default represent about 16% of the roughly 43 million Americans with student debt, now totaling $1.3 trillion across the U.S., and their numbers have continued to climb despite the expanding labor market.

Their failure to repay--in many cases due to low wages or unemployment, in other cases due to outright protest at what borrowers see as an unfair system--threatens to leave taxpayers on the hook for $125 billion, the total amount they owe.


The Obama administration says it can help borrowers like the Osbornes get back on track with programs that slash their monthly payments and forgive a portion of their balances, if only they would respond. The administration is also working to expand a program that forgives debt for borrowers who can prove their schools defrauded them with deceptive advertising claims.

And in a controversial move, the government has stepped up garnishments of borrowers' wages. It garnished $515 million in the nine months through March, federal figures show.

After years of uneven progress in reducing defaults, the Education Department is turning to a team of behavioral scientists who are trying to figure out how to get borrowers to respond, testing things such as what language to use in emails and what time of day to send text messages.


Most borrowers in default owe relatively small balances--a median of $8,900, according to the Education Department. But student advocates say that can be a lot of money for someone unemployed or in a low-paying job, and with other expenses to juggle.

And many feel they shouldn't have to pay anything.


It isn't clear how many borrowers in default are simply unable to repay, or are able to pay but refuse to do so in protest.

Illinois resident Jim Lopko, 36, said he would repay his debt if his balance hadn't skyrocketed because of interest. He owes $122,000 in student debt--a combination of federal and private loans--after graduating with an associate degree from one for-profit school and dropping out of a bachelor's program at a second in 2009. He said he dropped out because he had borrowed the maximum amount in federal loans and he couldn't gain access to any more private ones.

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