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Student loan defaults at an 18-year high

US borrowers owe $1.2 trillion in student loan debt, exceeding all other consumer borrowing except mortgages.Jacquelyn Martin/Associated Press

NEW YORK — About one in seven borrowers defaulted on their federal student loans, showing how former students are buckling under higher-education costs in a weak economy.

The default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the US Education Department said Monday. Based on a related measure, defaults are at the highest level since 1995.

The data follows the announcement by President Obama's administration that it would seek to restrain skyrocketing college expenses by tying federal financial aid to a new government rating of costs and educational outcomes. The rising number of defaults shows the pain of borrowers, said Rory O'Sullivan, policy and research director at Young Invincibles, a Washington nonprofit group.


''It's financial disaster for borrowers,'' said O'Sullivan, whose group represents the interests of people ages 18 to 34. ''Defaults can dramatically affect their credit rating and make it harder to borrow in the future.''

Monday's report covers the three years through Sept. 30, 2012. The default rate, which includes graduates and those who dropped out, shows the share of borrowers who haven't made required payments for at least 270 consecutive days.

US borrowers owe $1.2 trillion in student loan debt, including government loans and those from private lenders such as SLM Corp., commonly called Sallie Mae. That sum surpasses all other kinds of consumer borrowing except for mortgages.