According to new data from the U.S. Department of Education, an alarming number of borrowers failed to pay back all or part of their federally subsidized student loans just last year.
The number of borrowers who defaulted on their loans increased by a whopping 17 percent from 2015 to 2016. Overall, more than 3,000 borrowers defaulted on their student loans every single day, CNBC reported.
In 2016, about 42.4 million Americans owed around $1.3 trillion in federal student loan debt. Of those 42.4 million borrowers, about 10 percent — or 4.2 million — defaulted on their loans at one time or another. The number of borrowers who defaulted on their loans in 2016 was up by 14 percent from just the previous year. In 2015, the number of people who defaulted on their student loans was 3.6 million.
According to MarketWatch, 1.1 million of those 4.2 million borrowers defaulted on direct loans, or loans that are subsidized by the federal government.
"Despite a booming stock market and unemployment falling, student loan borrowers are struggling," Rohit Chopra, senior fellow at the Consumer Federation of America, told CNBC.
Chopra said that those who have defaulted on their student loans "are going to have a tougher time passing an employment verification check, saving for retirement or ever buying a home." They could also have their wages garnished or their tax refunds withheld.
Behind home mortgage debt, student loan debt is the largest source of consumer debt in the country. Unlike home mortgage debt, the majority of student loan debt is held by the federal government.
Adding insult to injury, a staggering number of U.S. college students aren't even using all of the money they borrowed to pay for school. About one-third of current college students applied the funds to their spring break vacations, according to another recent study.
Millions of other student borrowers admitted they have used their student loan funds to pay for drugs, alcohol, gambling or clothing, according to the same study.
Perhaps all of this shouldn't be surprising, though, considering how nearly half of U.S. college students believe their student loan debt will eventually be forgiven.
(H/T: Legal Insurrection)