For some borrowers, student loan debt is very difficult to manage. For black and Hispanic students, students who enter low paying, often public service, careers, or students who take on extremely high amounts of debt, defaulting is a very real possibility. And defaulting on student loans can be a crushing financial blow to a student, particularly if that student does not have outside support, such as family or friends, to rely on. At each default, collection costs of up to 40 percent of the loan balance are added to the loan plus any unpaid interest. If a borrower defaults multiple times, his or her balance can quickly balloon, making the total debt to be repaid even more daunting.7
The NCES study makes clear that to get a complete picture of student loan defaults it's necessary to disaggregate default rates by student characteristics and to track students' borrowing histories for longer time periods than the Department of Education does currently.
http://www.educationsector.org/publications/hidden-details-closer-look-student-loan-default-rates
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