Similar to other types of debt, such as auto loans and home mortgages, student debt is a form of debt taken by a person from a lending institution in order to attain higher education. Student debt, like other forms of debt, can also go into default; this happens if the loan has not been paid after a certain time period.
Over the past few years, student debt in the U.S. has increased significantly, recently surpassing over $1.0 trillion. What is troubling with a large portion of student debt is that it is guaranteed by the federal government; therefore, the government has to absorb the losses from those who default on their student debt. If the default rate increases, this additional liability can have a significant impact on U.S. national debt.
In the second quarter of 2014, the student debt in the U.S. economy stood at $1.12 trillion—an increase of $124 billion from a year ago. About 10.9% of all the student loans were more than 90+ days delinquent or were in outright default.