A higher percentage of people are defaulting on student loans now than last year

The share of borrowers who defaulted on their student loans within the last three years rose after four years of declines.

Roughly 11.5% of federal student loan borrowers who entered repayment in the 2013-2014 fiscal year defaulted on their student loans within three years, according to data published by the Department of Education Wednesday. The release is the latest indication that despite an improving labor market and a variety of options available to help borrowers manage their federal student loans, many are still struggling.

“We’re in a place now where no student should ever have to default because of income-driven repayment options, yet we see a higher percentage of students defaulting this year than last year,” said Robert Kelchen, a higher education professor at Seton Hall University. “Students are struggling despite the options available to them.”

Defaulting on a federal student loan can be a credit-ruining event. What’s more, once a borrower defaults, the government has extraordinary powers to get its loan money back, including by garnishing wages and Social Security checks.

But borrowers have access to a slew of repayment options, including programs that allow borrowers to pay back their debt as a percentage of their income, to help them avoid default. Kelchen said the challenges borrowers face despite these programs indicate that borrowers either aren’t aware of the programs or that they may be too complicated for borrowers to access easily.

Borrower advocates have also pointed to a different culprit: the companies, known as servicers, that the government hires to manage the student loan repayment process. Advocates said that these companies don’t do enough to work in borrowers’ best interest. They say that’s partly because servicers aren’t incentivized to spend the extra time that might be required to enroll borrowers in income-driven repayment programs.

The Trump administration is in the middle of revamping the contract process officials use to hire student loan servicers. Officials have said borrower satisfaction will be a priority, but it’s too early to say exactly how they’ll hold servicers accountable for working in the best interest of borrowers.